Correlation Between Trainers House and Neste Oil

Can any of the company-specific risk be diversified away by investing in both Trainers House and Neste Oil 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 Trainers House and Neste Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Trainers House and Neste Oil

0.62

Correlation Coefficient

Trainers House  Neste Oil

Poor diversification

The 3 months correlation between Trainers and Neste is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Trainers House Oyj and Neste Oil Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oil Oyj and Trainers House 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 Trainers House Oyj are associated (or correlated) with Neste Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oil Oyj has no effect on the direction of Trainers House i.e., Trainers House and Neste Oil go up and down completely randomly.

Pair Corralation between Trainers House and Neste Oil

Assuming the 90 days trading horizon Trainers House Oyj is expected to generate 1.12 times more return on investment than Neste Oil. However, Trainers House is 1.12 times more volatile than Neste Oil Oyj. It trades about -0.04 of its potential returns per unit of risk. Neste Oil Oyj is currently generating about -0.19 per unit of risk. If you would invest  242.00  in Trainers House Oyj on August 30, 2024 and sell it today you would lose (26.00) from holding Trainers House Oyj or give up 10.74% of portfolio value over 90 days.

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

Trainers House Oyj  vs.  Neste Oil Oyj

Trainers House Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trainers House Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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.

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 weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Trainers House and Neste Oil

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

The idea behind Trainers House Oyj and Neste Oil 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.