Correlation Between Nokian Renkaat and FRACTAL GAMING

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

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

Diversification Opportunities for Nokian Renkaat and FRACTAL GAMING

0.5

Correlation Coefficient

Nokian Renkaat  FRACTAL GAMING

Very weak diversification

The 3 months correlation between Nokian and FRACTAL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Renkaat Oyj and FRACTAL GAMING GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRACTAL GAMING GROUP and Nokian Renkaat 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 Nokian Renkaat Oyj are associated (or correlated) with FRACTAL GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRACTAL GAMING GROUP has no effect on the direction of Nokian Renkaat i.e., Nokian Renkaat and FRACTAL GAMING go up and down completely randomly.

Pair Corralation between Nokian Renkaat and FRACTAL GAMING

Assuming the 90 days horizon Nokian Renkaat is expected to generate 2.64 times less return on investment than FRACTAL GAMING. But when comparing it to its historical volatility, Nokian Renkaat Oyj is 1.31 times less risky than FRACTAL GAMING. It trades about 0.04 of its potential returns per unit of risk. FRACTAL GAMING GROUP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  274.00  in FRACTAL GAMING GROUP on October 25, 2024 and sell it today you would earn a total of  17.00  from holding FRACTAL GAMING GROUP or generate 6.2% return on investment over 90 days.

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

Nokian Renkaat Oyj  vs.  FRACTAL GAMING GROUP

Nokian Renkaat Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nokian Renkaat Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nokian Renkaat is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

FRACTAL GAMING GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FRACTAL GAMING GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FRACTAL GAMING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nokian Renkaat and FRACTAL GAMING

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

The idea behind Nokian Renkaat Oyj and FRACTAL GAMING GROUP 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.