Correlation Between INSURANCE AUST and Nokia

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

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

Diversification Opportunities for INSURANCE AUST and Nokia

-0.07

Correlation Coefficient

INSURANCE AUST  Nokia

Good diversification

The 3 months correlation between INSURANCE and Nokia is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia and INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Nokia go up and down completely randomly.

Pair Corralation between INSURANCE AUST and Nokia

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 0.67 times more return on investment than Nokia. However, INSURANCE AUST GRP is 1.49 times less risky than Nokia. It trades about 0.13 of its potential returns per unit of risk. Nokia is currently generating about 0.03 per unit of risk. If you would invest  456.00  in INSURANCE AUST GRP on September 5, 2024 and sell it today you would earn a total of  59.00  from holding INSURANCE AUST GRP or generate 12.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

INSURANCE AUST GRP  vs.  Nokia

INSURANCE AUST GRP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INSURANCE AUST GRP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, INSURANCE AUST exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nokia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nokia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nokia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INSURANCE AUST and Nokia

The main advantage of trading using opposite INSURANCE AUST and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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 INSURANCE AUST GRP 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.