Correlation Between Nokian Renkaat and Warimpex Finanz

Can any of the company-specific risk be diversified away by investing in both Nokian Renkaat and Warimpex Finanz 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 Warimpex Finanz 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 Warimpex Finanz und, you can compare the effects of market volatilities on Nokian Renkaat and Warimpex Finanz 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 Warimpex Finanz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokian Renkaat and Warimpex Finanz.

Diversification Opportunities for Nokian Renkaat and Warimpex Finanz

-0.44

Correlation Coefficient

Nokian Renkaat  Warimpex Finanz

Very good diversification

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

Pair Corralation between Nokian Renkaat and Warimpex Finanz

Assuming the 90 days trading horizon Nokian Renkaat Oyj is expected to under-perform the Warimpex Finanz. But the stock apears to be less risky and, when comparing its historical volatility, Nokian Renkaat Oyj is 1.06 times less risky than Warimpex Finanz. The stock trades about -0.06 of its potential returns per unit of risk. The Warimpex Finanz und is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Warimpex Finanz und on December 27, 2024 and sell it today you would lose (3.00) from holding Warimpex Finanz und or give up 4.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Nokian Renkaat Oyj  vs.  Warimpex Finanz und

Nokian Renkaat Oyj

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Warimpex Finanz und

Risk-Adjusted Performance

Very Weak

Over the last 90 days Warimpex Finanz und has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Warimpex Finanz is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nokian Renkaat and Warimpex Finanz

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

The idea behind Nokian Renkaat Oyj and Warimpex Finanz und 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .