Correlation Between Neste Oil and Nurminen Logistics

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

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

Diversification Opportunities for Neste Oil and Nurminen Logistics

-0.77

Correlation Coefficient

Neste Oil  Nurminen Logistics

Pay attention - limited upside

The 3 months correlation between Neste and Nurminen is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oil Oyj and Nurminen Logistics Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nurminen Logistics Oyj and Neste Oil 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 Neste Oil Oyj are associated (or correlated) with Nurminen Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nurminen Logistics Oyj has no effect on the direction of Neste Oil i.e., Neste Oil and Nurminen Logistics go up and down completely randomly.

Pair Corralation between Neste Oil and Nurminen Logistics

Assuming the 90 days trading horizon Neste Oil Oyj is expected to generate 1.15 times more return on investment than Nurminen Logistics. However, Neste Oil is 1.15 times more volatile than Nurminen Logistics Oyj. It trades about 0.32 of its potential returns per unit of risk. Nurminen Logistics Oyj is currently generating about 0.23 per unit of risk. If you would invest  1,116  in Neste Oil Oyj on October 24, 2024 and sell it today you would earn a total of  171.00  from holding Neste Oil Oyj or generate 15.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

Neste Oil Oyj  vs.  Nurminen Logistics Oyj

Neste Oil Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neste Oil Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Nurminen Logistics Oyj

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nurminen Logistics Oyj are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Nurminen Logistics demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neste Oil and Nurminen Logistics

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

The idea behind Neste Oil Oyj and Nurminen Logistics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.