Correlation Between Nokian Renkaat and Nexstim Oyj
Can any of the company-specific risk be diversified away by investing in both Nokian Renkaat and Nexstim 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 Nokian Renkaat and Nexstim Oyj 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 Nexstim Oyj, you can compare the effects of market volatilities on Nokian Renkaat and Nexstim 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 Nokian Renkaat with a short position of Nexstim Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokian Renkaat and Nexstim Oyj.
Diversification Opportunities for Nokian Renkaat and Nexstim Oyj
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nokian and Nexstim is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Renkaat Oyj and Nexstim Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstim Oyj 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 Nexstim Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstim Oyj has no effect on the direction of Nokian Renkaat i.e., Nokian Renkaat and Nexstim Oyj go up and down completely randomly.
Pair Corralation between Nokian Renkaat and Nexstim Oyj
Assuming the 90 days trading horizon Nokian Renkaat Oyj is expected to under-perform the Nexstim Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Nokian Renkaat Oyj is 1.64 times less risky than Nexstim Oyj. The stock trades about -0.01 of its potential returns per unit of risk. The Nexstim Oyj is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 420.00 in Nexstim Oyj on August 23, 2024 and sell it today you would earn a total of 96.00 from holding Nexstim Oyj or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nokian Renkaat Oyj vs. Nexstim Oyj
Performance |
| Timeline |
| Nokian Renkaat Oyj |
| Nexstim Oyj |
Nokian Renkaat and Nexstim Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokian Renkaat and Nexstim Oyj
The main advantage of trading using opposite Nokian Renkaat and Nexstim Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokian Renkaat position performs unexpectedly, Nexstim 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 Nexstim Oyj will offset losses from the drop in Nexstim Oyj's long position.| Nokian Renkaat vs. Fortum Oyj | Nokian Renkaat vs. Sampo Oyj A | Nokian Renkaat vs. Nordea Bank Abp | Nokian Renkaat vs. Wartsila Oyj Abp |
| Nexstim Oyj vs. Tokmanni Group Oyj | Nexstim Oyj vs. Kamux Suomi Oy | Nexstim Oyj vs. Vaisala Oyj A | Nexstim Oyj vs. Nokian Renkaat Oyj |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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