Correlation Between YIT Oyj and Nexstim Oyj
Can any of the company-specific risk be diversified away by investing in both YIT Oyj and Nexstim 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 YIT Oyj and Nexstim Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YIT Oyj and Nexstim Oyj, you can compare the effects of market volatilities on YIT Oyj and Nexstim 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 YIT Oyj with a short position of Nexstim Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of YIT Oyj and Nexstim Oyj.
Diversification Opportunities for YIT Oyj and Nexstim Oyj
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between YIT and Nexstim is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding YIT Oyj and Nexstim Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstim Oyj and YIT 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 YIT Oyj are associated (or correlated) with Nexstim Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstim Oyj has no effect on the direction of YIT Oyj i.e., YIT Oyj and Nexstim Oyj go up and down completely randomly.
Pair Corralation between YIT Oyj and Nexstim Oyj
Assuming the 90 days trading horizon YIT Oyj is expected to generate 1.78 times more return on investment than Nexstim Oyj. However, YIT Oyj is 1.78 times more volatile than Nexstim Oyj. It trades about 0.07 of its potential returns per unit of risk. Nexstim Oyj is currently generating about -0.3 per unit of risk. If you would invest 233.00 in YIT Oyj on August 30, 2024 and sell it today you would earn a total of 10.00 from holding YIT Oyj or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YIT Oyj vs. Nexstim Oyj
Performance |
| Timeline |
| YIT Oyj |
| Nexstim Oyj |
YIT Oyj and Nexstim Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YIT Oyj and Nexstim Oyj
The main advantage of trading using opposite YIT Oyj and Nexstim Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YIT Oyj position performs unexpectedly, Nexstim 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 Nexstim Oyj will offset losses from the drop in Nexstim Oyj's long position.| YIT Oyj vs. Outokumpu Oyj | YIT Oyj vs. Wartsila Oyj Abp | YIT Oyj vs. Telia Company AB | YIT Oyj vs. Konecranes Plc |
| Nexstim Oyj vs. Qt Group Oyj | Nexstim Oyj vs. Harvia Oyj | Nexstim Oyj vs. Sampo Oyj A | Nexstim Oyj vs. Kamux Suomi Oy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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