Correlation Between Nightingale Health and Verkkokauppa Oyj

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

Diversification Opportunities for Nightingale Health and Verkkokauppa Oyj

0.62

Correlation Coefficient

Nightingale Health  Verkkokauppa Oyj

Poor diversification

The 3 months correlation between Nightingale and Verkkokauppa is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nightingale Health Oyj and Verkkokauppa Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verkkokauppa 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 Verkkokauppa Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verkkokauppa Oyj has no effect on the direction of Nightingale Health i.e., Nightingale Health and Verkkokauppa Oyj go up and down completely randomly.

Pair Corralation between Nightingale Health and Verkkokauppa Oyj

Assuming the 90 days trading horizon Nightingale Health Oyj is expected to generate 1.63 times more return on investment than Verkkokauppa Oyj. However, Nightingale Health is 1.63 times more volatile than Verkkokauppa Oyj. It trades about -0.03 of its potential returns per unit of risk. Verkkokauppa Oyj is currently generating about -0.18 per unit of risk. If you would invest  316.00  in Nightingale Health Oyj on October 3, 2024 and sell it today you would lose (28.00) from holding Nightingale Health Oyj or give up 8.86% of portfolio value over 90 days.

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

Nightingale Health Oyj  vs.  Verkkokauppa 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 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.

Verkkokauppa Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verkkokauppa Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Nightingale Health and Verkkokauppa Oyj

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

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