Correlation Between AS Tallink and Nurminen Logistics

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Can any of the company-specific risk be diversified away by investing in both AS Tallink 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 AS Tallink and Nurminen Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AS Tallink Grupp and Nurminen Logistics Oyj, you can compare the effects of market volatilities on AS Tallink 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 AS Tallink with a short position of Nurminen Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AS Tallink and Nurminen Logistics.

Diversification Opportunities for AS Tallink and Nurminen Logistics

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between TALLINK and Nurminen is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding AS Tallink Grupp 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 AS Tallink 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 AS Tallink Grupp 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 AS Tallink i.e., AS Tallink and Nurminen Logistics go up and down completely randomly.

Pair Corralation between AS Tallink and Nurminen Logistics

Assuming the 90 days trading horizon AS Tallink Grupp is expected to under-perform the Nurminen Logistics. But the stock apears to be less risky and, when comparing its historical volatility, AS Tallink Grupp is 1.79 times less risky than Nurminen Logistics. The stock trades about -0.09 of its potential returns per unit of risk. The Nurminen Logistics Oyj is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Nurminen Logistics Oyj on October 9, 2024 and sell it today you would earn a total of  19.00  from holding Nurminen Logistics Oyj or generate 21.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AS Tallink Grupp  vs.  Nurminen Logistics Oyj

 Performance 
       Timeline  
AS Tallink Grupp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AS Tallink Grupp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, AS Tallink is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
Nurminen Logistics Oyj 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Nurminen Logistics Oyj are ranked lower than 19 (%) 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.

AS Tallink and Nurminen Logistics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AS Tallink and Nurminen Logistics

The main advantage of trading using opposite AS Tallink and Nurminen Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AS Tallink 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 AS Tallink Grupp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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