Correlation Between H-FARM SPA and Nokia

Can any of the company-specific risk be diversified away by investing in both H-FARM SPA and Nokia 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 H-FARM SPA and Nokia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between H FARM SPA and Nokia, you can compare the effects of market volatilities on H-FARM SPA and Nokia 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 H-FARM SPA with a short position of Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of H-FARM SPA and Nokia.

Diversification Opportunities for H-FARM SPA and Nokia

-0.18

Correlation Coefficient

H-FARM SPA  Nokia

Good diversification

The 3 months correlation between H-FARM and Nokia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia and H-FARM SPA 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 H FARM SPA are associated (or correlated) with Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of H-FARM SPA i.e., H-FARM SPA and Nokia go up and down completely randomly.

Pair Corralation between H-FARM SPA and Nokia

Assuming the 90 days horizon H-FARM SPA is expected to generate 2.8 times less return on investment than Nokia. In addition to that, H-FARM SPA is 2.83 times more volatile than Nokia. It trades about 0.0 of its total potential returns per unit of risk. Nokia is currently generating about 0.01 per unit of volatility. If you would invest  434.00  in Nokia on October 4, 2024 and sell it today you would lose (4.00) from holding Nokia or give up 0.92% of portfolio value over 90 days.

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

H FARM SPA  vs.  Nokia

H FARM SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H FARM SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Nokia

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nokia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Nokia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with H-FARM SPA and Nokia

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

The idea behind H FARM SPA and Nokia 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.