Correlation Between Nokian Tyres and Compagnie Generale
Can any of the company-specific risk be diversified away by investing in both Nokian Tyres and Compagnie Generale 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 Tyres and Compagnie Generale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokian Tyres Plc and Compagnie Generale des, you can compare the effects of market volatilities on Nokian Tyres and Compagnie Generale 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 Tyres with a short position of Compagnie Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokian Tyres and Compagnie Generale.
Diversification Opportunities for Nokian Tyres and Compagnie Generale
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nokian and Compagnie is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Tyres Plc and Compagnie Generale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Generale des and Nokian Tyres 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 Tyres Plc are associated (or correlated) with Compagnie Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Generale des has no effect on the direction of Nokian Tyres i.e., Nokian Tyres and Compagnie Generale go up and down completely randomly.
Pair Corralation between Nokian Tyres and Compagnie Generale
Assuming the 90 days horizon Nokian Tyres is expected to generate 1.83 times less return on investment than Compagnie Generale. In addition to that, Nokian Tyres is 1.95 times more volatile than Compagnie Generale des. It trades about 0.03 of its total potential returns per unit of risk. Compagnie Generale des is currently generating about 0.11 per unit of volatility. If you would invest 1,469 in Compagnie Generale des on January 24, 2024 and sell it today you would earn a total of 418.00 from holding Compagnie Generale des or generate 28.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nokian Tyres Plc vs. Compagnie Generale des
Performance |
| Timeline |
| Nokian Tyres Plc |
| Compagnie Generale des |
Nokian Tyres and Compagnie Generale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokian Tyres and Compagnie Generale
The main advantage of trading using opposite Nokian Tyres and Compagnie Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokian Tyres position performs unexpectedly, Compagnie Generale 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 Compagnie Generale will offset losses from the drop in Compagnie Generale's long position.| Nokian Tyres vs. Allison Transmission Holdings | Nokian Tyres vs. Luminar Technologies | Nokian Tyres vs. Quantumscape Corp | Nokian Tyres vs. Lear Corporation |
| Compagnie Generale vs. Allison Transmission Holdings | Compagnie Generale vs. Luminar Technologies | Compagnie Generale vs. Quantumscape Corp | Compagnie Generale vs. Lear 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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