Correlation Between Herantis Pharma and Nanoform Finland

Can any of the company-specific risk be diversified away by investing in both Herantis Pharma and Nanoform Finland 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 Herantis Pharma and Nanoform Finland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Herantis Pharma Oyj and Nanoform Finland Plc, you can compare the effects of market volatilities on Herantis Pharma and Nanoform Finland 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 Herantis Pharma with a short position of Nanoform Finland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herantis Pharma and Nanoform Finland.

Diversification Opportunities for Herantis Pharma and Nanoform Finland

0.04

Correlation Coefficient

Herantis Pharma  Nanoform Finland

Significant diversification

The 3 months correlation between Herantis and Nanoform is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Herantis Pharma Oyj and Nanoform Finland Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanoform Finland Plc and Herantis Pharma 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 Herantis Pharma Oyj are associated (or correlated) with Nanoform Finland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanoform Finland Plc has no effect on the direction of Herantis Pharma i.e., Herantis Pharma and Nanoform Finland go up and down completely randomly.

Pair Corralation between Herantis Pharma and Nanoform Finland

Assuming the 90 days trading horizon Herantis Pharma Oyj is expected to under-perform the Nanoform Finland. But the stock apears to be less risky and, when comparing its historical volatility, Herantis Pharma Oyj is 1.28 times less risky than Nanoform Finland. The stock trades about -0.01 of its potential returns per unit of risk. The Nanoform Finland Plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  132.00  in Nanoform Finland Plc on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Nanoform Finland Plc or generate 1.52% return on investment over 90 days.

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

Herantis Pharma Oyj  vs.  Nanoform Finland Plc

Herantis Pharma Oyj

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Herantis Pharma Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Herantis Pharma may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nanoform Finland Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanoform Finland Plc 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Herantis Pharma and Nanoform Finland

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

The idea behind Herantis Pharma Oyj and Nanoform Finland Plc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.