Correlation Between Nokia Oyj and Nurminen Logistics

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

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

Diversification Opportunities for Nokia Oyj and Nurminen Logistics

0.15

Correlation Coefficient

Nokia Oyj  Nurminen Logistics

Average diversification

The 3 months correlation between Nokia and Nurminen is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nokia Oyj and Nurminen Logistics Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nurminen Logistics Oyj and Nokia Oyj 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 Oyj are associated (or correlated) with Nurminen Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nurminen Logistics Oyj has no effect on the direction of Nokia Oyj i.e., Nokia Oyj and Nurminen Logistics go up and down completely randomly.

Pair Corralation between Nokia Oyj and Nurminen Logistics

Assuming the 90 days trading horizon Nokia Oyj is expected to generate 1.84 times less return on investment than Nurminen Logistics. But when comparing it to its historical volatility, Nokia Oyj is 1.5 times less risky than Nurminen Logistics. It trades about 0.37 of its potential returns per unit of risk. Nurminen Logistics Oyj is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  95.00  in Nurminen Logistics Oyj on October 5, 2024 and sell it today you would earn a total of  13.00  from holding Nurminen Logistics Oyj or generate 13.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nokia Oyj  vs.  Nurminen Logistics Oyj

Nokia Oyj

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nokia Oyj are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Nokia Oyj may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nurminen Logistics Oyj

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nurminen Logistics Oyj are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Nurminen Logistics demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nokia Oyj and Nurminen Logistics

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

The idea behind Nokia Oyj and Nurminen Logistics Oyj 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.