Correlation Between Nokia and CeoTronics
Can any of the company-specific risk be diversified away by investing in both Nokia and CeoTronics 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 and CeoTronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokia and CeoTronics AG, you can compare the effects of market volatilities on Nokia and CeoTronics 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 with a short position of CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia and CeoTronics.
Diversification Opportunities for Nokia and CeoTronics
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nokia and CeoTronics is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nokia and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG and Nokia 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 are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Nokia i.e., Nokia and CeoTronics go up and down completely randomly.
Pair Corralation between Nokia and CeoTronics
Assuming the 90 days trading horizon Nokia is expected to generate 1.05 times more return on investment than CeoTronics. However, Nokia is 1.05 times more volatile than CeoTronics AG. It trades about 0.04 of its potential returns per unit of risk. CeoTronics AG is currently generating about 0.01 per unit of risk. If you would invest 367.00 in Nokia on August 31, 2024 and sell it today you would earn a total of 29.00 from holding Nokia or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Nokia vs. CeoTronics AG
Performance |
| Timeline |
| Nokia |
| CeoTronics AG |
Nokia and CeoTronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokia and CeoTronics
The main advantage of trading using opposite Nokia and CeoTronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia position performs unexpectedly, CeoTronics 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 CeoTronics will offset losses from the drop in CeoTronics' long position.| Nokia vs. Motorola Solutions | Nokia vs. Nokia | Nokia vs. ZTE Corporation | Nokia vs. Hewlett Packard Enterprise |
| CeoTronics vs. Motorola Solutions | CeoTronics vs. Nokia | CeoTronics vs. ZTE Corporation | CeoTronics vs. Hewlett Packard Enterprise |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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