Correlation Between NoHo Partners and Outokumpu Oyj

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

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

Diversification Opportunities for NoHo Partners and Outokumpu Oyj

-0.74

Correlation Coefficient

NoHo Partners  Outokumpu Oyj

Pay attention - limited upside

The 3 months correlation between NoHo and Outokumpu is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding NoHo Partners Oyj and Outokumpu Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outokumpu Oyj and NoHo Partners 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 NoHo Partners Oyj are associated (or correlated) with Outokumpu Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outokumpu Oyj has no effect on the direction of NoHo Partners i.e., NoHo Partners and Outokumpu Oyj go up and down completely randomly.

Pair Corralation between NoHo Partners and Outokumpu Oyj

Assuming the 90 days trading horizon NoHo Partners Oyj is expected to generate 0.71 times more return on investment than Outokumpu Oyj. However, NoHo Partners Oyj is 1.41 times less risky than Outokumpu Oyj. It trades about 0.04 of its potential returns per unit of risk. Outokumpu Oyj is currently generating about -0.05 per unit of risk. If you would invest  667.00  in NoHo Partners Oyj on October 11, 2024 and sell it today you would earn a total of  135.00  from holding NoHo Partners Oyj or generate 20.24% return on investment over 90 days.

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

NoHo Partners Oyj  vs.  Outokumpu Oyj

NoHo Partners Oyj

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NoHo Partners Oyj are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, NoHo Partners may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Outokumpu Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Outokumpu Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with NoHo Partners and Outokumpu Oyj

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

The idea behind NoHo Partners Oyj and Outokumpu 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.