Correlation Between Nokia Oyj and YIT Oyj
Can any of the company-specific risk be diversified away by investing in both Nokia Oyj and YIT Oyj 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 Oyj and YIT Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokia Oyj and YIT Oyj, you can compare the effects of market volatilities on Nokia Oyj and YIT Oyj 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 Oyj with a short position of YIT Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia Oyj and YIT Oyj.
Diversification Opportunities for Nokia Oyj and YIT Oyj
Very good diversification
The 3 months correlation between Nokia and YIT is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nokia Oyj and YIT Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YIT Oyj and Nokia Oyj 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 Oyj are associated (or correlated) with YIT Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YIT Oyj has no effect on the direction of Nokia Oyj i.e., Nokia Oyj and YIT Oyj go up and down completely randomly.
Pair Corralation between Nokia Oyj and YIT Oyj
Assuming the 90 days trading horizon Nokia Oyj is expected to generate 0.67 times more return on investment than YIT Oyj. However, Nokia Oyj is 1.48 times less risky than YIT Oyj. It trades about 0.02 of its potential returns per unit of risk. YIT Oyj is currently generating about -0.04 per unit of risk. If you would invest 395.00 in Nokia Oyj on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Nokia Oyj or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nokia Oyj vs. YIT Oyj
Performance |
| Timeline |
| Nokia Oyj |
| YIT Oyj |
Nokia Oyj and YIT Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokia Oyj and YIT Oyj
The main advantage of trading using opposite Nokia Oyj and YIT Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia Oyj position performs unexpectedly, YIT Oyj 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 YIT Oyj will offset losses from the drop in YIT Oyj's long position.| Nokia Oyj vs. Fortum Oyj | Nokia Oyj vs. Nordea Bank Abp | Nokia Oyj vs. Sampo Oyj A | Nokia Oyj vs. Neste Oil Oyj |
| YIT Oyj vs. Outokumpu Oyj | YIT Oyj vs. Wartsila Oyj Abp | YIT Oyj vs. Telia Company AB | YIT Oyj vs. Konecranes Plc |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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