Correlation Between Black Diamond and Nokia Corp

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Can any of the company-specific risk be diversified away by investing in both Black Diamond and Nokia Corp 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 Black Diamond and Nokia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Diamond Therapeutics and Nokia Corp ADR, you can compare the effects of market volatilities on Black Diamond and Nokia Corp 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 Black Diamond with a short position of Nokia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Diamond and Nokia Corp.

Diversification Opportunities for Black Diamond and Nokia Corp

BlackNokiaDiversified AwayBlackNokiaDiversified Away100%
0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Black and Nokia is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Therapeutics and Nokia Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia Corp ADR and Black Diamond 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 Black Diamond Therapeutics are associated (or correlated) with Nokia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia Corp ADR has no effect on the direction of Black Diamond i.e., Black Diamond and Nokia Corp go up and down completely randomly.

Pair Corralation between Black Diamond and Nokia Corp

Given the investment horizon of 90 days Black Diamond Therapeutics is expected to under-perform the Nokia Corp. In addition to that, Black Diamond is 1.84 times more volatile than Nokia Corp ADR. It trades about -0.26 of its total potential returns per unit of risk. Nokia Corp ADR is currently generating about 0.04 per unit of volatility. If you would invest  434.00  in Nokia Corp ADR on September 27, 2024 and sell it today you would earn a total of  15.00  from holding Nokia Corp ADR or generate 3.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Black Diamond Therapeutics  vs.  Nokia Corp ADR

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -40-30-20-10010
JavaScript chart by amCharts 3.21.15BDTX NOK
       Timeline  
Black Diamond Therap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Black Diamond Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.533.54
Nokia Corp ADR 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Nokia Corp ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Nokia Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec44.24.44.64.85

Black Diamond and Nokia Corp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.02-5.26-3.49-1.730.01.342.694.055.41 0.020.040.060.08
JavaScript chart by amCharts 3.21.15BDTX NOK
       Returns  

Pair Trading with Black Diamond and Nokia Corp

The main advantage of trading using opposite Black Diamond and Nokia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Diamond position performs unexpectedly, Nokia Corp 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 Corp will offset losses from the drop in Nokia Corp's long position.
The idea behind Black Diamond Therapeutics and Nokia Corp ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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