Correlation Between Star Gas and Neste Oyj

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

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

Diversification Opportunities for Star Gas and Neste Oyj

-0.53

Correlation Coefficient

Star Gas  Neste Oyj

Excellent diversification

The 3 months correlation between Star and Neste is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Star Gas Partners and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj and Star Gas 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 Star Gas Partners 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 Star Gas i.e., Star Gas and Neste Oyj go up and down completely randomly.

Pair Corralation between Star Gas and Neste Oyj

Considering the 90-day investment horizon Star Gas Partners is expected to generate 0.67 times more return on investment than Neste Oyj. However, Star Gas Partners is 1.5 times less risky than Neste Oyj. It trades about -0.01 of its potential returns per unit of risk. Neste Oyj is currently generating about -0.15 per unit of risk. If you would invest  1,196  in Star Gas Partners on September 17, 2024 and sell it today you would lose (23.00) from holding Star Gas Partners or give up 1.92% of portfolio value over 90 days.

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

Star Gas Partners  vs.  Neste Oyj

Star Gas Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Gas Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Star Gas is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private 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 Star Gas and Neste Oyj

The main advantage of trading using opposite Star Gas and Neste Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Gas 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 Star Gas Partners 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.