Correlation Between Polyplex Public and Nokian Renkaat
Can any of the company-specific risk be diversified away by investing in both Polyplex Public and Nokian Renkaat 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 Polyplex Public and Nokian Renkaat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polyplex Public and Nokian Renkaat Oyj, you can compare the effects of market volatilities on Polyplex Public and Nokian Renkaat 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 Polyplex Public with a short position of Nokian Renkaat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polyplex Public and Nokian Renkaat.
Diversification Opportunities for Polyplex Public and Nokian Renkaat
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polyplex and Nokian is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Polyplex Public and Nokian Renkaat Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokian Renkaat Oyj and Polyplex Public 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 Polyplex Public are associated (or correlated) with Nokian Renkaat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokian Renkaat Oyj has no effect on the direction of Polyplex Public i.e., Polyplex Public and Nokian Renkaat go up and down completely randomly.
Pair Corralation between Polyplex Public and Nokian Renkaat
Assuming the 90 days horizon Polyplex Public is expected to generate 17.91 times more return on investment than Nokian Renkaat. However, Polyplex Public is 17.91 times more volatile than Nokian Renkaat Oyj. It trades about 0.23 of its potential returns per unit of risk. Nokian Renkaat Oyj is currently generating about -0.2 per unit of risk. If you would invest 14.00 in Polyplex Public on August 29, 2024 and sell it today you would earn a total of 22.00 from holding Polyplex Public or generate 157.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polyplex Public vs. Nokian Renkaat Oyj
Performance |
| Timeline |
| Polyplex Public |
| Nokian Renkaat Oyj |
Polyplex Public and Nokian Renkaat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polyplex Public and Nokian Renkaat
The main advantage of trading using opposite Polyplex Public and Nokian Renkaat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polyplex Public position performs unexpectedly, Nokian Renkaat 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 Nokian Renkaat will offset losses from the drop in Nokian Renkaat's long position.| Polyplex Public vs. Bridgestone | Polyplex Public vs. The Goodyear Tire | Polyplex Public vs. Sumitomo Rubber Industries | Polyplex Public vs. Zeon Corporation |
| Nokian Renkaat vs. Bridgestone | Nokian Renkaat vs. The Goodyear Tire | Nokian Renkaat vs. Sumitomo Rubber Industries | Nokian Renkaat vs. Zeon Corporation |
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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