Correlation Between Nitro Games and TF Bank

Can any of the company-specific risk be diversified away by investing in both Nitro Games and TF Bank 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 Nitro Games and TF Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nitro Games Oyj and TF Bank AB, you can compare the effects of market volatilities on Nitro Games and TF Bank 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 Nitro Games with a short position of TF Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nitro Games and TF Bank.

Diversification Opportunities for Nitro Games and TF Bank

0.02

Correlation Coefficient

Nitro Games  TF Bank

Significant diversification

The 3 months correlation between Nitro and TFBANK is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nitro Games Oyj and TF Bank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TF Bank AB and Nitro Games 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 Nitro Games Oyj are associated (or correlated) with TF Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TF Bank AB has no effect on the direction of Nitro Games i.e., Nitro Games and TF Bank go up and down completely randomly.

Pair Corralation between Nitro Games and TF Bank

Assuming the 90 days trading horizon Nitro Games Oyj is expected to under-perform the TF Bank. In addition to that, Nitro Games is 2.27 times more volatile than TF Bank AB. It trades about -0.02 of its total potential returns per unit of risk. TF Bank AB is currently generating about 0.07 per unit of volatility. If you would invest  18,200  in TF Bank AB on September 3, 2024 and sell it today you would earn a total of  16,500  from holding TF Bank AB or generate 90.66% return on investment over 90 days.

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

Nitro Games Oyj  vs.  TF Bank AB

Nitro Games Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nitro Games Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nitro Games is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

TF Bank AB

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TF Bank AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, TF Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nitro Games and TF Bank

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

The idea behind Nitro Games Oyj and TF Bank AB 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.