Correlation Between Polyplex (Thailand) and Nokian Renkaat
Can any of the company-specific risk be diversified away by investing in both Polyplex (Thailand) and Nokian Renkaat 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 Polyplex (Thailand) and Nokian Renkaat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polyplex Public and Nokian Renkaat Oyj, you can compare the effects of market volatilities on Polyplex (Thailand) and Nokian Renkaat 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 Polyplex (Thailand) with a short position of Nokian Renkaat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polyplex (Thailand) and Nokian Renkaat.
Diversification Opportunities for Polyplex (Thailand) and Nokian Renkaat
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Polyplex and Nokian is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Polyplex Public and Nokian Renkaat Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokian Renkaat Oyj and Polyplex (Thailand) 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 Polyplex Public are associated (or correlated) with Nokian Renkaat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokian Renkaat Oyj has no effect on the direction of Polyplex (Thailand) i.e., Polyplex (Thailand) and Nokian Renkaat go up and down completely randomly.
Pair Corralation between Polyplex (Thailand) and Nokian Renkaat
Assuming the 90 days horizon Polyplex Public is expected to generate 5.11 times more return on investment than Nokian Renkaat. However, Polyplex (Thailand) is 5.11 times more volatile than Nokian Renkaat Oyj. It trades about 0.08 of its potential returns per unit of risk. Nokian Renkaat Oyj is currently generating about -0.02 per unit of risk. If you would invest 9.88 in Polyplex Public on September 25, 2024 and sell it today you would earn a total of 21.12 from holding Polyplex Public or generate 213.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Polyplex Public vs. Nokian Renkaat Oyj
Performance |
Timeline |
Polyplex (Thailand) |
Nokian Renkaat Oyj |
Polyplex (Thailand) and Nokian Renkaat Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Polyplex (Thailand) and Nokian Renkaat
The main advantage of trading using opposite Polyplex (Thailand) and Nokian Renkaat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polyplex (Thailand) position performs unexpectedly, Nokian Renkaat 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 Renkaat will offset losses from the drop in Nokian Renkaat's long position.Polyplex (Thailand) vs. Bridgestone | Polyplex (Thailand) vs. Advanced Drainage Systems | Polyplex (Thailand) vs. The Goodyear Tire | Polyplex (Thailand) vs. Sumitomo Rubber Industries |
Nokian Renkaat vs. Bridgestone | Nokian Renkaat vs. Advanced Drainage Systems | Nokian Renkaat vs. The Goodyear Tire | Nokian Renkaat vs. Sumitomo Rubber Industries |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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