Correlation Between Nokia and SPORTING

Can any of the company-specific risk be diversified away by investing in both Nokia and SPORTING 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 and SPORTING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nokia and SPORTING, you can compare the effects of market volatilities on Nokia and SPORTING 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 with a short position of SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia and SPORTING.

Diversification Opportunities for Nokia and SPORTING

0.57

Correlation Coefficient

Nokia  SPORTING

Very weak diversification

The 3 months correlation between Nokia and SPORTING is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nokia and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING and Nokia 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 are associated (or correlated) with SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Nokia i.e., Nokia and SPORTING go up and down completely randomly.

Pair Corralation between Nokia and SPORTING

Assuming the 90 days trading horizon Nokia is expected to generate 4.18 times less return on investment than SPORTING. But when comparing it to its historical volatility, Nokia is 1.12 times less risky than SPORTING. It trades about 0.01 of its potential returns per unit of risk. SPORTING is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  78.00  in SPORTING on September 23, 2024 and sell it today you would earn a total of  24.00  from holding SPORTING or generate 30.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Nokia  vs.  SPORTING

Nokia

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nokia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nokia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPORTING

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPORTING are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, SPORTING is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nokia and SPORTING

The main advantage of trading using opposite Nokia and SPORTING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia position performs unexpectedly, SPORTING 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 SPORTING will offset losses from the drop in SPORTING's long position.

The idea behind Nokia and SPORTING pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 CEOs Directory module to screen CEOs from public companies around the world.