Correlation Between CARSALESCOM and Neste Oyj
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM and Neste Oyj 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 CARSALESCOM and Neste Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Neste Oyj, you can compare the effects of market volatilities on CARSALESCOM and Neste Oyj 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 CARSALESCOM with a short position of Neste Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and Neste Oyj.
Diversification Opportunities for CARSALESCOM and Neste Oyj
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between CARSALESCOM and Neste is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj and CARSALESCOM 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 CARSALESCOM are associated (or correlated) with Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of CARSALESCOM i.e., CARSALESCOM and Neste Oyj go up and down completely randomly.
Pair Corralation between CARSALESCOM and Neste Oyj
Assuming the 90 days trading horizon CARSALESCOM is expected to under-perform the Neste Oyj. But the stock apears to be less risky and, when comparing its historical volatility, CARSALESCOM is 2.28 times less risky than Neste Oyj. The stock trades about -0.55 of its potential returns per unit of risk. The Neste Oyj is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Neste Oyj on October 8, 2024 and sell it today you would lose (37.00) from holding Neste Oyj or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Neste Oyj
Performance |
| Timeline |
| CARSALESCOM |
| Neste Oyj |
CARSALESCOM and Neste Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and Neste Oyj
The main advantage of trading using opposite CARSALESCOM and Neste Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM position performs unexpectedly, Neste Oyj 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 Neste Oyj will offset losses from the drop in Neste Oyj's long position.| CARSALESCOM vs. INDUSTRIAL MINERALS LTD | CARSALESCOM vs. Zijin Mining Group | CARSALESCOM vs. ADRIATIC METALS LS 013355 | CARSALESCOM vs. GREENX METALS LTD |
| Neste Oyj vs. NESTE OYJ UNSPADR | Neste Oyj vs. Superior Plus Corp | Neste Oyj vs. NMI Holdings | Neste Oyj vs. SIVERS SEMICONDUCTORS AB |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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