Correlation Between CapMan Oyj and Nexstim Oyj

Can any of the company-specific risk be diversified away by investing in both CapMan 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 CapMan 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 CapMan Oyj B and Nexstim Oyj, you can compare the effects of market volatilities on CapMan 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 CapMan Oyj with a short position of Nexstim Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapMan Oyj and Nexstim Oyj.

Diversification Opportunities for CapMan Oyj and Nexstim Oyj

-0.56

Correlation Coefficient

CapMan Oyj  Nexstim Oyj

Excellent diversification

The 3 months correlation between CapMan and Nexstim is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and Nexstim Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstim Oyj and CapMan 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 CapMan Oyj B 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 CapMan Oyj i.e., CapMan Oyj and Nexstim Oyj go up and down completely randomly.

Pair Corralation between CapMan Oyj and Nexstim Oyj

Assuming the 90 days trading horizon CapMan Oyj is expected to generate 8.64 times less return on investment than Nexstim Oyj. But when comparing it to its historical volatility, CapMan Oyj B is 3.31 times less risky than Nexstim Oyj. It trades about 0.12 of its potential returns per unit of risk. Nexstim Oyj is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Nexstim Oyj on October 8, 2024 and sell it today you would earn a total of  180.00  from holding Nexstim Oyj or generate 26.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CapMan Oyj B  vs.  Nexstim Oyj

CapMan Oyj B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapMan Oyj B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CapMan Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Nexstim Oyj

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstim Oyj are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Nexstim Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapMan Oyj and Nexstim Oyj

The main advantage of trading using opposite CapMan Oyj and Nexstim Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapMan 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.

The idea behind CapMan Oyj B and Nexstim Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.