Correlation Between Take Two and Nokian Tyres
Can any of the company-specific risk be diversified away by investing in both Take Two and Nokian Tyres 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 Take Two and Nokian Tyres into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and Nokian Tyres Plc, you can compare the effects of market volatilities on Take Two and Nokian Tyres 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 Take Two with a short position of Nokian Tyres. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Nokian Tyres.
Diversification Opportunities for Take Two and Nokian Tyres
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Take and Nokian is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Nokian Tyres Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokian Tyres Plc and Take Two 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 Take Two Interactive Software are associated (or correlated) with Nokian Tyres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokian Tyres Plc has no effect on the direction of Take Two i.e., Take Two and Nokian Tyres go up and down completely randomly.
Pair Corralation between Take Two and Nokian Tyres
Given the investment horizon of 90 days Take Two is expected to generate 3.04 times less return on investment than Nokian Tyres. But when comparing it to its historical volatility, Take Two Interactive Software is 1.45 times less risky than Nokian Tyres. It trades about 0.05 of its potential returns per unit of risk. Nokian Tyres Plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 369.00 in Nokian Tyres Plc on January 30, 2024 and sell it today you would earn a total of 104.00 from holding Nokian Tyres Plc or generate 28.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Take Two Interactive Software vs. Nokian Tyres Plc
Performance |
Timeline |
Take Two Interactive |
Nokian Tyres Plc |
Take Two and Nokian Tyres Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Take Two and Nokian Tyres
The main advantage of trading using opposite Take Two and Nokian Tyres positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Nokian Tyres 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 Nokian Tyres will offset losses from the drop in Nokian Tyres' long position.The idea behind Take Two Interactive Software and Nokian Tyres Plc 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.Nokian Tyres vs. Continental AG PK | Nokian Tyres vs. Douglas Dynamics | Nokian Tyres vs. Hyliion Holdings Corp | Nokian Tyres vs. BorgWarner |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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