Correlation Between HKFoods Oyj and Nightingale Health

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

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

Diversification Opportunities for HKFoods Oyj and Nightingale Health

-0.42

Correlation Coefficient

HKFoods Oyj  Nightingale Health

Very good diversification

The 3 months correlation between HKFoods and Nightingale is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding HKFoods Oyj A and Nightingale Health Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nightingale Health Oyj and HKFoods 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 HKFoods Oyj A are associated (or correlated) with Nightingale Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nightingale Health Oyj has no effect on the direction of HKFoods Oyj i.e., HKFoods Oyj and Nightingale Health go up and down completely randomly.

Pair Corralation between HKFoods Oyj and Nightingale Health

Assuming the 90 days trading horizon HKFoods Oyj A is expected to generate 0.81 times more return on investment than Nightingale Health. However, HKFoods Oyj A is 1.24 times less risky than Nightingale Health. It trades about 0.14 of its potential returns per unit of risk. Nightingale Health Oyj is currently generating about -0.08 per unit of risk. If you would invest  62.00  in HKFoods Oyj A on September 2, 2024 and sell it today you would earn a total of  20.00  from holding HKFoods Oyj A or generate 32.26% return on investment over 90 days.

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

HKFoods Oyj A  vs.  Nightingale Health Oyj

HKFoods Oyj A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HKFoods Oyj A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, HKFoods Oyj unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 inconsistent performance in the last few months, the Stock's basic indicators remain somewhat 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 HKFoods Oyj and Nightingale Health

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

The idea behind HKFoods Oyj A and Nightingale Health 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.