Correlation Between Nokia and Telefonaktiebolaget

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

By analyzing existing cross correlation between Nokia and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Nokia and Telefonaktiebolaget 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 Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia and Telefonaktiebolaget.

Diversification Opportunities for Nokia and Telefonaktiebolaget

0.0

Correlation Coefficient

Nokia  Telefonaktiebolaget

Pay attention - limited upside

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

Pair Corralation between Nokia and Telefonaktiebolaget

If you would invest (100.00) in Telefonaktiebolaget LM Ericsson on May 7, 2025 and sell it today you would earn a total of  100.00  from holding Telefonaktiebolaget LM Ericsson or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nokia  vs.  Telefonaktiebolaget LM Ericsso

Nokia

Risk-Adjusted Performance

Weakest

Over the last 90 days Nokia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nokia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Telefonaktiebolaget

Risk-Adjusted Performance

Weakest

Over the last 90 days Telefonaktiebolaget LM Ericsson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nokia and Telefonaktiebolaget

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

The idea behind Nokia and Telefonaktiebolaget LM Ericsson 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.