Correlation Between Stellar and Nurminen Logistics

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

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

Diversification Opportunities for Stellar and Nurminen Logistics

0.84

Correlation Coefficient

Stellar  Nurminen Logistics

Very poor diversification

The 3 months correlation between Stellar and Nurminen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Stellar 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 Stellar 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 Stellar 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 Stellar i.e., Stellar and Nurminen Logistics go up and down completely randomly.

Pair Corralation between Stellar and Nurminen Logistics

Assuming the 90 days trading horizon Stellar is expected to generate 3.47 times more return on investment than Nurminen Logistics. However, Stellar is 3.47 times more volatile than Nurminen Logistics Oyj. It trades about 0.09 of its potential returns per unit of risk. Nurminen Logistics Oyj is currently generating about 0.23 per unit of risk. If you would invest  40.00  in Stellar on October 24, 2024 and sell it today you would earn a total of  4.00  from holding Stellar or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	80.95%
Values	Daily Returns

Stellar  vs.  Nurminen Logistics Oyj

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nurminen Logistics Oyj

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nurminen Logistics Oyj are ranked lower than 21 (%) 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 Stellar and Nurminen Logistics

The main advantage of trading using opposite Stellar and Nurminen Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.