Correlation Between HF Sinclair and Neste Oyj

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

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

Diversification Opportunities for HF Sinclair and Neste Oyj

0.83

Correlation Coefficient

HF Sinclair  Neste Oyj

Very poor diversification

The 3 months correlation between DINO and Neste is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj and HF Sinclair 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 HF Sinclair Corp are associated (or correlated) with Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of HF Sinclair i.e., HF Sinclair and Neste Oyj go up and down completely randomly.

Pair Corralation between HF Sinclair and Neste Oyj

Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the Neste Oyj. But the stock apears to be less risky and, when comparing its historical volatility, HF Sinclair Corp is 1.4 times less risky than Neste Oyj. The stock trades about -0.38 of its potential returns per unit of risk. The Neste Oyj is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  719.00  in Neste Oyj on September 16, 2024 and sell it today you would lose (58.00) from holding Neste Oyj or give up 8.07% of portfolio value over 90 days.

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

HF Sinclair Corp  vs.  Neste Oyj

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Neste Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neste Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HF Sinclair and Neste Oyj

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

The idea behind HF Sinclair Corp and Neste 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.