Correlation Between Nokian Renkaat and Spinnova
Can any of the company-specific risk be diversified away by investing in both Nokian Renkaat and Spinnova 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 Spinnova 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 Spinnova Oy, you can compare the effects of market volatilities on Nokian Renkaat and Spinnova 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 Spinnova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokian Renkaat and Spinnova.
Diversification Opportunities for Nokian Renkaat and Spinnova
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nokian and Spinnova is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Renkaat Oyj and Spinnova Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spinnova Oy 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 Spinnova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spinnova Oy has no effect on the direction of Nokian Renkaat i.e., Nokian Renkaat and Spinnova go up and down completely randomly.
Pair Corralation between Nokian Renkaat and Spinnova
Assuming the 90 days trading horizon Nokian Renkaat Oyj is expected to generate 0.4 times more return on investment than Spinnova. However, Nokian Renkaat Oyj is 2.51 times less risky than Spinnova. It trades about -0.22 of its potential returns per unit of risk. Spinnova Oy is currently generating about -0.54 per unit of risk. If you would invest 813.00 in Nokian Renkaat Oyj on August 27, 2024 and sell it today you would lose (58.00) from holding Nokian Renkaat Oyj or give up 7.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nokian Renkaat Oyj vs. Spinnova Oy
Performance |
| Timeline |
| Nokian Renkaat Oyj |
| Spinnova Oy |
Nokian Renkaat and Spinnova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokian Renkaat and Spinnova
The main advantage of trading using opposite Nokian Renkaat and Spinnova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokian Renkaat position performs unexpectedly, Spinnova 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 Spinnova will offset losses from the drop in Spinnova'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 |
| Spinnova vs. Qt Group Oyj | Spinnova vs. Kempower Oyj | Spinnova vs. Harvia Oyj | Spinnova vs. Nordea Bank Abp |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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