Correlation Between Nokian Renkaat and Luminar Technologies
Can any of the company-specific risk be diversified away by investing in both Nokian Renkaat and Luminar Technologies 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 Luminar Technologies 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 Luminar Technologies, you can compare the effects of market volatilities on Nokian Renkaat and Luminar Technologies 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 Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokian Renkaat and Luminar Technologies.
Diversification Opportunities for Nokian Renkaat and Luminar Technologies
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nokian and Luminar is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Renkaat Oyj and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies 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 Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Nokian Renkaat i.e., Nokian Renkaat and Luminar Technologies go up and down completely randomly.
Pair Corralation between Nokian Renkaat and Luminar Technologies
Assuming the 90 days horizon Nokian Renkaat Oyj is expected to generate 0.29 times more return on investment than Luminar Technologies. However, Nokian Renkaat Oyj is 3.49 times less risky than Luminar Technologies. It trades about 0.01 of its potential returns per unit of risk. Luminar Technologies is currently generating about -0.05 per unit of risk. If you would invest 807.00 in Nokian Renkaat Oyj on September 4, 2024 and sell it today you would lose (7.00) from holding Nokian Renkaat Oyj or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.89% |
| Values | Daily Returns |
Nokian Renkaat Oyj vs. Luminar Technologies
Performance |
| Timeline |
| Nokian Renkaat Oyj |
| Luminar Technologies |
Nokian Renkaat and Luminar Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokian Renkaat and Luminar Technologies
The main advantage of trading using opposite Nokian Renkaat and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokian Renkaat position performs unexpectedly, Luminar Technologies 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.| Nokian Renkaat vs. Luminar Technologies | Nokian Renkaat vs. Mobileye Global Class | Nokian Renkaat vs. Hyliion Holdings Corp | Nokian Renkaat vs. Aeva Technologies |
| Luminar Technologies vs. Mobileye Global Class | Luminar Technologies vs. Hyliion Holdings Corp | Luminar Technologies vs. Aeva Technologies | Luminar Technologies vs. Innoviz Technologies |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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