Correlation Between Nokian Renkaat and PT Gajah
Can any of the company-specific risk be diversified away by investing in both Nokian Renkaat and PT Gajah 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 PT Gajah 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 PT Gajah Tunggal, you can compare the effects of market volatilities on Nokian Renkaat and PT Gajah 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 PT Gajah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokian Renkaat and PT Gajah.
Diversification Opportunities for Nokian Renkaat and PT Gajah
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nokian and GH8 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Renkaat Oyj and PT Gajah Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gajah Tunggal 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 PT Gajah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gajah Tunggal has no effect on the direction of Nokian Renkaat i.e., Nokian Renkaat and PT Gajah go up and down completely randomly.
Pair Corralation between Nokian Renkaat and PT Gajah
Assuming the 90 days horizon Nokian Renkaat Oyj is expected to generate 0.16 times more return on investment than PT Gajah. However, Nokian Renkaat Oyj is 6.16 times less risky than PT Gajah. It trades about -0.16 of its potential returns per unit of risk. PT Gajah Tunggal is currently generating about -0.03 per unit of risk. If you would invest 788.00 in Nokian Renkaat Oyj on September 1, 2024 and sell it today you would lose (55.00) from holding Nokian Renkaat Oyj or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nokian Renkaat Oyj vs. PT Gajah Tunggal
Performance |
| Timeline |
| Nokian Renkaat Oyj |
| PT Gajah Tunggal |
Nokian Renkaat and PT Gajah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokian Renkaat and PT Gajah
The main advantage of trading using opposite Nokian Renkaat and PT Gajah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokian Renkaat position performs unexpectedly, PT Gajah 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 PT Gajah will offset losses from the drop in PT Gajah's long position.| Nokian Renkaat vs. Bridgestone | Nokian Renkaat vs. The Goodyear Tire | Nokian Renkaat vs. Sumitomo Rubber Industries | Nokian Renkaat vs. Zeon Corporation |
| PT Gajah vs. SCANSOURCE | PT Gajah vs. RETAIL FOOD GROUP | PT Gajah vs. AUTO TRADER ADR | PT Gajah vs. GungHo Online Entertainment |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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