Correlation Between Nightingale Health and Toivo Group

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

Diversification Opportunities for Nightingale Health and Toivo Group

0.48

Correlation Coefficient

Nightingale Health  Toivo Group

Very weak diversification

The 3 months correlation between Nightingale and Toivo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nightingale Health Oyj and Toivo Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toivo 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 Toivo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toivo Group Oyj has no effect on the direction of Nightingale Health i.e., Nightingale Health and Toivo Group go up and down completely randomly.

Pair Corralation between Nightingale Health and Toivo Group

Assuming the 90 days trading horizon Nightingale Health Oyj is expected to generate 0.99 times more return on investment than Toivo Group. However, Nightingale Health Oyj is 1.01 times less risky than Toivo Group. It trades about 0.17 of its potential returns per unit of risk. Toivo Group Oyj is currently generating about -0.17 per unit of risk. If you would invest  278.00  in Nightingale Health Oyj on October 26, 2024 and sell it today you would earn a total of  22.00  from holding Nightingale Health Oyj or generate 7.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Nightingale Health Oyj  vs.  Toivo Group Oyj

Nightingale Health Oyj

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Nightingale Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Toivo Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toivo Group Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Nightingale Health and Toivo Group

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

The idea behind Nightingale Health Oyj and Toivo 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.