Correlation Between Nokia and FIH Mobile
Can any of the company-specific risk be diversified away by investing in both Nokia and FIH Mobile 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 FIH Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokia and FIH Mobile Limited, you can compare the effects of market volatilities on Nokia and FIH Mobile 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 FIH Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia and FIH Mobile.
Diversification Opportunities for Nokia and FIH Mobile
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nokia and FIH is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nokia and FIH Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIH Mobile Limited 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 FIH Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIH Mobile Limited has no effect on the direction of Nokia i.e., Nokia and FIH Mobile go up and down completely randomly.
Pair Corralation between Nokia and FIH Mobile
Assuming the 90 days trading horizon Nokia is expected to generate 0.49 times more return on investment than FIH Mobile. However, Nokia is 2.04 times less risky than FIH Mobile. It trades about 0.03 of its potential returns per unit of risk. FIH Mobile Limited is currently generating about -0.05 per unit of risk. If you would invest 387.00 in Nokia on August 30, 2024 and sell it today you would earn a total of 9.00 from holding Nokia or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Nokia vs. FIH Mobile Limited
Performance |
| Timeline |
| Nokia |
| FIH Mobile Limited |
Nokia and FIH Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokia and FIH Mobile
The main advantage of trading using opposite Nokia and FIH Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia position performs unexpectedly, FIH Mobile 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 FIH Mobile will offset losses from the drop in FIH Mobile's long position.| Nokia vs. Cisco Systems | Nokia vs. Superior Plus Corp | Nokia vs. SIVERS SEMICONDUCTORS AB | Nokia vs. Talanx AG |
| FIH Mobile vs. WESTLAKE CHEMICAL | FIH Mobile vs. MARKET VECTR RETAIL | FIH Mobile vs. JIAHUA STORES | FIH Mobile vs. Westlake Chemical |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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