Correlation Between Neste Oil and Wulff Yhtiot

Can any of the company-specific risk be diversified away by investing in both Neste Oil and Wulff Yhtiot 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 Wulff Yhtiot 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 Wulff Yhtiot Oy, you can compare the effects of market volatilities on Neste Oil and Wulff Yhtiot 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 Wulff Yhtiot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neste Oil and Wulff Yhtiot.

Diversification Opportunities for Neste Oil and Wulff Yhtiot

-0.35

Correlation Coefficient

Neste Oil  Wulff Yhtiot

Very good diversification

The 3 months correlation between Neste and Wulff is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oil Oyj and Wulff Yhtiot Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wulff Yhtiot Oy 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 Wulff Yhtiot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wulff Yhtiot Oy has no effect on the direction of Neste Oil i.e., Neste Oil and Wulff Yhtiot go up and down completely randomly.

Pair Corralation between Neste Oil and Wulff Yhtiot

Assuming the 90 days trading horizon Neste Oil Oyj is expected to under-perform the Wulff Yhtiot. In addition to that, Neste Oil is 1.38 times more volatile than Wulff Yhtiot Oy. It trades about -0.08 of its total potential returns per unit of risk. Wulff Yhtiot Oy is currently generating about 0.03 per unit of volatility. If you would invest  300.00  in Wulff Yhtiot Oy on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Wulff Yhtiot Oy or generate 2.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Neste Oil Oyj  vs.  Wulff Yhtiot Oy

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.

Wulff Yhtiot Oy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wulff Yhtiot Oy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Wulff Yhtiot is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Neste Oil and Wulff Yhtiot

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

The idea behind Neste Oil Oyj and Wulff Yhtiot Oy 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.