Correlation Between Neste Oyj and AKR Corporindo
Can any of the company-specific risk be diversified away by investing in both Neste Oyj and AKR Corporindo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Neste Oyj and AKR Corporindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neste Oyj and AKR Corporindo Tbk, you can compare the effects of market volatilities on Neste Oyj and AKR Corporindo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Neste Oyj with a short position of AKR Corporindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neste Oyj and AKR Corporindo.
Diversification Opportunities for Neste Oyj and AKR Corporindo
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Neste and AKR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oyj and AKR Corporindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKR Corporindo Tbk and Neste Oyj is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Neste Oyj are associated (or correlated) with AKR Corporindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKR Corporindo Tbk has no effect on the direction of Neste Oyj i.e., Neste Oyj and AKR Corporindo go up and down completely randomly.
Pair Corralation between Neste Oyj and AKR Corporindo
Assuming the 90 days horizon Neste Oyj is expected to under-perform the AKR Corporindo. In addition to that, Neste Oyj is 4.13 times more volatile than AKR Corporindo Tbk. It trades about -0.05 of its total potential returns per unit of risk. AKR Corporindo Tbk is currently generating about 0.04 per unit of volatility. If you would invest 168.00 in AKR Corporindo Tbk on August 30, 2024 and sell it today you would earn a total of 42.00 from holding AKR Corporindo Tbk or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.15% |
| Values | Daily Returns |
Neste Oyj vs. AKR Corporindo Tbk
Performance |
| Timeline |
| Neste Oyj |
| AKR Corporindo Tbk |
Neste Oyj and AKR Corporindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neste Oyj and AKR Corporindo
The main advantage of trading using opposite Neste Oyj and AKR Corporindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neste Oyj position performs unexpectedly, AKR Corporindo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AKR Corporindo will offset losses from the drop in AKR Corporindo's long position.| Neste Oyj vs. Cosan SA ADR | Neste Oyj vs. Ultrapar Participacoes SA | Neste Oyj vs. Delek Logistics Partners | Neste Oyj vs. Sunoco LP |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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