Correlation Between SPORTING and Nokia

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

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

Diversification Opportunities for SPORTING and Nokia

0.57

Correlation Coefficient

SPORTING  Nokia

Very weak diversification

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

Pair Corralation between SPORTING and Nokia

Assuming the 90 days trading horizon SPORTING is expected to generate 1.12 times more return on investment than Nokia. However, SPORTING is 1.12 times more volatile than Nokia. It trades about 0.04 of its potential returns per unit of risk. Nokia is currently generating about 0.01 per unit of risk. 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

SPORTING  vs.  Nokia

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.

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.

Pair Trading with SPORTING and Nokia

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

The idea behind SPORTING and Nokia 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.