Correlation Between Tecnotree Oyj and Nurminen Logistics

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

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

Diversification Opportunities for Tecnotree Oyj and Nurminen Logistics

-0.89

Correlation Coefficient

Tecnotree Oyj  Nurminen Logistics

Pay attention - limited upside

The 3 months correlation between Tecnotree and Nurminen is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tecnotree 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 Tecnotree Oyj 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 Tecnotree 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 Tecnotree Oyj i.e., Tecnotree Oyj and Nurminen Logistics go up and down completely randomly.

Pair Corralation between Tecnotree Oyj and Nurminen Logistics

Assuming the 90 days trading horizon Tecnotree Oyj is expected to under-perform the Nurminen Logistics. In addition to that, Tecnotree Oyj is 1.61 times more volatile than Nurminen Logistics Oyj. It trades about -0.03 of its total potential returns per unit of risk. Nurminen Logistics Oyj is currently generating about 0.45 per unit of volatility. If you would invest  96.00  in Nurminen Logistics Oyj on October 8, 2024 and sell it today you would earn a total of  12.00  from holding Nurminen Logistics Oyj or generate 12.5% return on investment over 90 days.

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

Tecnotree Oyj  vs.  Nurminen Logistics Oyj

Tecnotree Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tecnotree 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.

Nurminen Logistics Oyj

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nurminen Logistics Oyj are ranked lower than 20 (%) 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 Tecnotree Oyj and Nurminen Logistics

The main advantage of trading using opposite Tecnotree Oyj and Nurminen Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tecnotree Oyj 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 Tecnotree 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 Transaction History module to view history of all your transactions and understand their impact on performance.