Correlation Between Nokia Corp and Network 1

Can any of the company-specific risk be diversified away by investing in both Nokia Corp and Network 1 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 Corp and Network 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nokia Corp ADR and Network 1 Technologies, you can compare the effects of market volatilities on Nokia Corp and Network 1 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 Corp with a short position of Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia Corp and Network 1.

Diversification Opportunities for Nokia Corp and Network 1

-0.44

Correlation Coefficient

Nokia Corp  Network 1

Very good diversification

The 3 months correlation between Nokia and Network is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nokia Corp ADR and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies and Nokia Corp 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 Corp ADR are associated (or correlated) with Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of Nokia Corp i.e., Nokia Corp and Network 1 go up and down completely randomly.

Pair Corralation between Nokia Corp and Network 1

Considering the 90-day investment horizon Nokia Corp ADR is expected to generate 0.72 times more return on investment than Network 1. However, Nokia Corp ADR is 1.38 times less risky than Network 1. It trades about 0.14 of its potential returns per unit of risk. Network 1 Technologies is currently generating about -0.13 per unit of risk. If you would invest  425.00  in Nokia Corp ADR on September 21, 2024 and sell it today you would earn a total of  18.00  from holding Nokia Corp ADR or generate 4.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nokia Corp ADR  vs.  Network 1 Technologies

Nokia Corp ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nokia Corp ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Nokia Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Network 1 Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network 1 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Nokia Corp and Network 1

The main advantage of trading using opposite Nokia Corp and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia Corp position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.

The idea behind Nokia Corp ADR and Network 1 Technologies 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..