Correlation Between Neste Oyj and Abeona Therapeutics

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

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

Diversification Opportunities for Neste Oyj and Abeona Therapeutics

-0.85

Correlation Coefficient

Neste Oyj  Abeona Therapeutics

Pay attention - limited upside

The 3 months correlation between Neste and Abeona is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oyj and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics and Neste 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 Neste Oyj are associated (or correlated) with Abeona Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abeona Therapeutics has no effect on the direction of Neste Oyj i.e., Neste Oyj and Abeona Therapeutics go up and down completely randomly.

Pair Corralation between Neste Oyj and Abeona Therapeutics

Assuming the 90 days horizon Neste Oyj is expected to generate 0.21 times more return on investment than Abeona Therapeutics. However, Neste Oyj is 4.82 times less risky than Abeona Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Abeona Therapeutics is currently generating about -0.23 per unit of risk. If you would invest  1,357  in Neste Oyj on January 25, 2024 and sell it today you would earn a total of  20.00  from holding Neste Oyj or generate 1.47% return on investment over 90 days.

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

Neste Oyj  vs.  Abeona Therapeutics

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 unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Abeona Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abeona Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Neste Oyj and Abeona Therapeutics

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

The idea behind Neste Oyj and Abeona Therapeutics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..