Correlation Between Nokia Ab and Elastic NV

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Can any of the company-specific risk be diversified away by investing in both Nokia Ab and Elastic NV 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 Ab and Elastic NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokia Ab Oy and Elastic NV, you can compare the effects of market volatilities on Nokia Ab and Elastic NV 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 Ab with a short position of Elastic NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia Ab and Elastic NV.

Diversification Opportunities for Nokia Ab and Elastic NV

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nokia and Elastic is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nokia Ab Oy and Elastic NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elastic NV and Nokia Ab 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 Ab Oy are associated (or correlated) with Elastic NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elastic NV has no effect on the direction of Nokia Ab i.e., Nokia Ab and Elastic NV go up and down completely randomly.

Pair Corralation between Nokia Ab and Elastic NV

Assuming the 90 days horizon Nokia Ab Oy is expected to generate 0.84 times more return on investment than Elastic NV. However, Nokia Ab Oy is 1.2 times less risky than Elastic NV. It trades about 0.03 of its potential returns per unit of risk. Elastic NV is currently generating about -0.02 per unit of risk. If you would invest  409.00  in Nokia Ab Oy on August 30, 2022 and sell it today you would earn a total of  78.00  from holding Nokia Ab Oy or generate 19.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Nokia Ab Oy  vs.  Elastic NV

 Performance (%) 
       Timeline  
Nokia Ab Oy 
Nokia Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nokia Ab Oy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Nokia Ab is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nokia Price Channel

Elastic NV 
Elastic Performance
0 of 100
Over the last 90 days Elastic NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Elastic Price Channel

Nokia Ab and Elastic NV Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nokia Ab and Elastic NV

The main advantage of trading using opposite Nokia Ab and Elastic NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia Ab position performs unexpectedly, Elastic NV 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 Elastic NV will offset losses from the drop in Elastic NV's long position.
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The idea behind Nokia Ab Oy and Elastic NV 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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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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