Correlation Between Nightingale Health and Vaisala Oyj

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

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

Diversification Opportunities for Nightingale Health and Vaisala Oyj

-0.35

Correlation Coefficient

Nightingale Health  Vaisala Oyj

Very good diversification

The 3 months correlation between Nightingale and Vaisala is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nightingale Health Oyj and Vaisala Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaisala Oyj A and Nightingale Health 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 Nightingale Health Oyj are associated (or correlated) with Vaisala Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaisala Oyj A has no effect on the direction of Nightingale Health i.e., Nightingale Health and Vaisala Oyj go up and down completely randomly.

Pair Corralation between Nightingale Health and Vaisala Oyj

Assuming the 90 days trading horizon Nightingale Health Oyj is expected to under-perform the Vaisala Oyj. In addition to that, Nightingale Health is 2.78 times more volatile than Vaisala Oyj A. It trades about -0.02 of its total potential returns per unit of risk. Vaisala Oyj A is currently generating about 0.03 per unit of volatility. If you would invest  4,625  in Vaisala Oyj A on September 16, 2024 and sell it today you would earn a total of  95.00  from holding Vaisala Oyj A or generate 2.05% return on investment over 90 days.

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

Nightingale Health Oyj  vs.  Vaisala Oyj A

Nightingale Health Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nightingale Health Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nightingale Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Vaisala Oyj A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vaisala Oyj A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Vaisala Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nightingale Health and Vaisala Oyj

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

The idea behind Nightingale Health Oyj and Vaisala Oyj A 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.