Correlation Between Nokia and Chengdu PUTIAN
Can any of the company-specific risk be diversified away by investing in both Nokia and Chengdu PUTIAN 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 Chengdu PUTIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokia and Chengdu PUTIAN Telecommunications, you can compare the effects of market volatilities on Nokia and Chengdu PUTIAN 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 Chengdu PUTIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia and Chengdu PUTIAN.
Diversification Opportunities for Nokia and Chengdu PUTIAN
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nokia and Chengdu is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nokia and Chengdu PUTIAN Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu PUTIAN Telec 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 Chengdu PUTIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu PUTIAN Telec has no effect on the direction of Nokia i.e., Nokia and Chengdu PUTIAN go up and down completely randomly.
Pair Corralation between Nokia and Chengdu PUTIAN
Assuming the 90 days trading horizon Nokia is expected to generate 1.8 times less return on investment than Chengdu PUTIAN. But when comparing it to its historical volatility, Nokia is 2.47 times less risky than Chengdu PUTIAN. It trades about 0.1 of its potential returns per unit of risk. Chengdu PUTIAN Telecommunications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6.25 in Chengdu PUTIAN Telecommunications on October 18, 2024 and sell it today you would earn a total of 1.50 from holding Chengdu PUTIAN Telecommunications or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nokia vs. Chengdu PUTIAN Telecommunicati
Performance |
| Timeline |
| Nokia |
| Chengdu PUTIAN Telec |
Nokia and Chengdu PUTIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokia and Chengdu PUTIAN
The main advantage of trading using opposite Nokia and Chengdu PUTIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia position performs unexpectedly, Chengdu PUTIAN 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 Chengdu PUTIAN will offset losses from the drop in Chengdu PUTIAN's long position.The idea behind Nokia and Chengdu PUTIAN Telecommunications 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.| Chengdu PUTIAN vs. Cisco Systems | Chengdu PUTIAN vs. Motorola Solutions | Chengdu PUTIAN vs. Nokia | Chengdu PUTIAN vs. Nokia |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |