Correlation Between Nasdaq and Karelia Tobacco

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

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

Diversification Opportunities for Nasdaq and Karelia Tobacco

-0.3

Correlation Coefficient

Nasdaq  Karelia Tobacco

Very good diversification

The 3 months correlation between Nasdaq and Karelia is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Karelia Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karelia Tobacco and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Karelia Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karelia Tobacco has no effect on the direction of Nasdaq i.e., Nasdaq and Karelia Tobacco go up and down completely randomly.

Pair Corralation between Nasdaq and Karelia Tobacco

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Karelia Tobacco. In addition to that, Nasdaq is 3.11 times more volatile than Karelia Tobacco. It trades about -0.17 of its total potential returns per unit of risk. Karelia Tobacco is currently generating about -0.11 per unit of volatility. If you would invest  33,800  in Karelia Tobacco on October 7, 2024 and sell it today you would lose (200.00) from holding Karelia Tobacco or give up 0.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

Nasdaq Inc  vs.  Karelia Tobacco

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Karelia Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Karelia Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Karelia Tobacco is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nasdaq and Karelia Tobacco

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

The idea behind Nasdaq Inc and Karelia Tobacco 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.