Correlation Between Bitcoin and Nokian Renkaat

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

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

Diversification Opportunities for Bitcoin and Nokian Renkaat

0.63

Correlation Coefficient

Bitcoin  Nokian Renkaat

Poor diversification

The 3 months correlation between Bitcoin and Nokian is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Nokian Renkaat Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokian Renkaat Oyj and Bitcoin 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 Bitcoin are associated (or correlated) with Nokian Renkaat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokian Renkaat Oyj has no effect on the direction of Bitcoin i.e., Bitcoin and Nokian Renkaat go up and down completely randomly.

Pair Corralation between Bitcoin and Nokian Renkaat

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Nokian Renkaat. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin is 1.07 times less risky than Nokian Renkaat. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Nokian Renkaat Oyj is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  723.00  in Nokian Renkaat Oyj on December 23, 2024 and sell it today you would lose (59.00) from holding Nokian Renkaat Oyj or give up 8.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.31%
Values	Daily Returns

Bitcoin  vs.  Nokian Renkaat Oyj

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin 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 Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin shareholders.

Nokian Renkaat Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nokian Renkaat Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Bitcoin and Nokian Renkaat

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

The idea behind Bitcoin and Nokian Renkaat 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.