Correlation Between Nightingale Health and Tamtron Group

Can any of the company-specific risk be diversified away by investing in both Nightingale Health and Tamtron Group 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 Tamtron Group 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 Tamtron Group Oyj, you can compare the effects of market volatilities on Nightingale Health and Tamtron Group 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 Tamtron Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nightingale Health and Tamtron Group.

Diversification Opportunities for Nightingale Health and Tamtron Group

-0.25

Correlation Coefficient

Nightingale Health  Tamtron Group

Very good diversification

The 3 months correlation between Nightingale and Tamtron is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nightingale Health Oyj and Tamtron Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamtron Group 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 Tamtron Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamtron Group Oyj has no effect on the direction of Nightingale Health i.e., Nightingale Health and Tamtron Group go up and down completely randomly.

Pair Corralation between Nightingale Health and Tamtron Group

Assuming the 90 days trading horizon Nightingale Health Oyj is expected to generate 1.79 times more return on investment than Tamtron Group. However, Nightingale Health is 1.79 times more volatile than Tamtron Group Oyj. It trades about 0.07 of its potential returns per unit of risk. Tamtron Group Oyj is currently generating about 0.0 per unit of risk. If you would invest  278.00  in Nightingale Health Oyj on December 27, 2024 and sell it today you would earn a total of  33.00  from holding Nightingale Health Oyj or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Nightingale Health Oyj  vs.  Tamtron Group Oyj

Nightingale Health Oyj

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nightingale Health Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nightingale Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Tamtron Group Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tamtron Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tamtron Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nightingale Health and Tamtron Group

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

The idea behind Nightingale Health Oyj and Tamtron Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.