Correlation Between Nightingale Health and Alma Media

Can any of the company-specific risk be diversified away by investing in both Nightingale Health and Alma Media 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 Nightingale Health and Alma Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nightingale Health Oyj and Alma Media Oyj, you can compare the effects of market volatilities on Nightingale Health and Alma Media 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 Nightingale Health with a short position of Alma Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nightingale Health and Alma Media.

Diversification Opportunities for Nightingale Health and Alma Media

-0.12

Correlation Coefficient

Nightingale Health  Alma Media

Good diversification

The 3 months correlation between Nightingale and Alma is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nightingale Health Oyj and Alma Media Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alma Media Oyj and Nightingale Health 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 Nightingale Health Oyj are associated (or correlated) with Alma Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alma Media Oyj has no effect on the direction of Nightingale Health i.e., Nightingale Health and Alma Media go up and down completely randomly.

Pair Corralation between Nightingale Health and Alma Media

Assuming the 90 days trading horizon Nightingale Health Oyj is expected to under-perform the Alma Media. In addition to that, Nightingale Health is 1.41 times more volatile than Alma Media Oyj. It trades about -0.14 of its total potential returns per unit of risk. Alma Media Oyj is currently generating about 0.08 per unit of volatility. If you would invest  1,125  in Alma Media Oyj on December 2, 2024 and sell it today you would earn a total of  55.00  from holding Alma Media Oyj or generate 4.89% return on investment over 90 days.

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

Nightingale Health Oyj  vs.  Alma Media Oyj

Nightingale Health Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nightingale Health Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alma Media Oyj

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alma Media Oyj are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Alma Media is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nightingale Health and Alma Media

The main advantage of trading using opposite Nightingale Health and Alma Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nightingale Health position performs unexpectedly, Alma Media 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 Alma Media will offset losses from the drop in Alma Media's long position.

The idea behind Nightingale Health Oyj and Alma Media 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.