Correlation Between Eneos Holdings and Neste Oyj

Can any of the company-specific risk be diversified away by investing in both Eneos Holdings and Neste 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 Eneos Holdings and Neste Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Eneos Holdings and Neste Oyj

0.38

Correlation Coefficient

Eneos Holdings  Neste Oyj

Weak diversification

The 3 months correlation between Eneos and Neste is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eneos Holdings ADR and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj and Eneos Holdings 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 Eneos Holdings ADR are associated (or correlated) with Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of Eneos Holdings i.e., Eneos Holdings and Neste Oyj go up and down completely randomly.

Pair Corralation between Eneos Holdings and Neste Oyj

Assuming the 90 days horizon Eneos Holdings ADR is expected to generate 2.53 times more return on investment than Neste Oyj. However, Eneos Holdings is 2.53 times more volatile than Neste Oyj. It trades about 0.01 of its potential returns per unit of risk. Neste Oyj is currently generating about -0.14 per unit of risk. If you would invest  1,215  in Eneos Holdings ADR on October 9, 2024 and sell it today you would lose (89.00) from holding Eneos Holdings ADR or give up 7.33% of portfolio value over 90 days.

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

Eneos Holdings ADR  vs.  Neste Oyj

Eneos Holdings ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Eneos Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Neste Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neste 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 forward indicators remain fairly 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 Eneos Holdings and Neste Oyj

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

The idea behind Eneos Holdings ADR and Neste 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.