Correlation Between Microwave Filter and Nokia Corp

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

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

Diversification Opportunities for Microwave Filter and Nokia Corp

0.0

Correlation Coefficient

Microwave Filter  Nokia Corp

Pay attention - limited upside

The 3 months correlation between Microwave and Nokia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microwave Filter 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 Microwave Filter 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 Microwave Filter 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 Microwave Filter i.e., Microwave Filter and Nokia Corp go up and down completely randomly.

Pair Corralation between Microwave Filter and Nokia Corp

If you would invest  444.00  in Nokia Corp ADR on December 26, 2024 and sell it today you would earn a total of  89.00  from holding Nokia Corp ADR or generate 20.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Microwave Filter  vs.  Nokia Corp ADR

Microwave Filter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microwave Filter has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Microwave Filter is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nokia Corp ADR

Risk-Adjusted Performance

Good

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

Pair Trading with Microwave Filter and Nokia Corp

The main advantage of trading using opposite Microwave Filter and Nokia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microwave Filter 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 Microwave Filter 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.