Correlation Between Nokia and Nokia

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

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

Diversification Opportunities for Nokia and Nokia

0.88

Correlation Coefficient

Nokia  Nokia

Very poor diversification

The 3 months correlation between Nokia and Nokia is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nokia and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia and Nokia 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 Nokia 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 Nokia i.e., Nokia and Nokia go up and down completely randomly.

Pair Corralation between Nokia and Nokia

Assuming the 90 days trading horizon Nokia is expected to generate 1.24 times less return on investment than Nokia. In addition to that, Nokia is 1.31 times more volatile than Nokia. It trades about 0.13 of its total potential returns per unit of risk. Nokia is currently generating about 0.21 per unit of volatility. If you would invest  399.00  in Nokia on November 20, 2024 and sell it today you would earn a total of  81.00  from holding Nokia or generate 20.3% return on investment over 90 days.

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

Nokia  vs.  Nokia

Nokia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nokia are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nokia reported solid returns over the last few months and may actually be approaching a breakup point.

Nokia

Risk-Adjusted Performance

Solid

Over the last 90 days Nokia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Nokia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nokia and Nokia

The main advantage of trading using opposite Nokia and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia 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 Nokia 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.