Correlation Between Nokian Tyres and Trinseo SA

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Can any of the company-specific risk be diversified away by investing in both Nokian Tyres and Trinseo SA 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 Trinseo SA 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 Trinseo SA, you can compare the effects of market volatilities on Nokian Tyres and Trinseo SA 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 Trinseo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokian Tyres and Trinseo SA.

Diversification Opportunities for Nokian Tyres and Trinseo SA

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Nokian and Trinseo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Tyres Plc and Trinseo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinseo SA 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 Trinseo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinseo SA has no effect on the direction of Nokian Tyres i.e., Nokian Tyres and Trinseo SA go up and down completely randomly.

Pair Corralation between Nokian Tyres and Trinseo SA

If you would invest (100.00) in Nokian Tyres Plc on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Nokian Tyres Plc or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Nokian Tyres Plc  vs.  Trinseo SA

 Performance 
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Nokian Tyres Plc 

Risk-Adjusted Performance

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Insignificant
Over the last 90 days Nokian Tyres Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Nokian Tyres is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Trinseo SA 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Trinseo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nokian Tyres and Trinseo SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nokian Tyres and Trinseo SA

The main advantage of trading using opposite Nokian Tyres and Trinseo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokian Tyres position performs unexpectedly, Trinseo SA 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 Trinseo SA will offset losses from the drop in Trinseo SA's long position.
The idea behind Nokian Tyres Plc and Trinseo SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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