Correlation Between Fukuyama Transporting and Nokia

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

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

Diversification Opportunities for Fukuyama Transporting and Nokia

0.57

Correlation Coefficient

Fukuyama Transporting  Nokia

Very weak diversification

The 3 months correlation between Fukuyama and Nokia is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fukuyama Transporting Co and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia and Fukuyama Transporting 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 Fukuyama Transporting Co 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 Fukuyama Transporting i.e., Fukuyama Transporting and Nokia go up and down completely randomly.

Pair Corralation between Fukuyama Transporting and Nokia

Assuming the 90 days horizon Fukuyama Transporting is expected to generate 7.48 times less return on investment than Nokia. But when comparing it to its historical volatility, Fukuyama Transporting Co is 1.26 times less risky than Nokia. It trades about 0.03 of its potential returns per unit of risk. Nokia is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  420.00  in Nokia on December 21, 2024 and sell it today you would earn a total of  76.00  from holding Nokia or generate 18.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Fukuyama Transporting Co  vs.  Nokia

Fukuyama Transporting

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fukuyama Transporting Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fukuyama Transporting is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nokia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nokia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nokia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fukuyama Transporting and Nokia

The main advantage of trading using opposite Fukuyama Transporting and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fukuyama Transporting 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 Fukuyama Transporting Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.