Correlation Between Nokia Ab and Repligen

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

Diversification Opportunities for Nokia Ab and Repligen

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nokia and Repligen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nokia Ab Oy and Repligen Cp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repligen Cp 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 Repligen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repligen Cp has no effect on the direction of Nokia Ab i.e., Nokia Ab and Repligen go up and down completely randomly.

Pair Corralation between Nokia Ab and Repligen

Assuming the 90 days horizon Nokia Ab Oy is expected to generate 0.46 times more return on investment than Repligen. However, Nokia Ab Oy is 2.16 times less risky than Repligen. It trades about 0.27 of its potential returns per unit of risk. Repligen Cp is currently generating about -0.04 per unit of risk. If you would invest  435.00  in Nokia Ab Oy on August 28, 2022 and sell it today you would earn a total of  52.00  from holding Nokia Ab Oy or generate 11.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Nokia Ab Oy  vs.  Repligen Cp

 Performance (%) 
       Timeline  
Nokia Ab Oy 
Nokia Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nokia Ab Oy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental drivers, Nokia Ab may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Nokia Price Channel

Repligen Cp 
Repligen Performance
0 of 100
Over the last 90 days Repligen Cp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Repligen Price Channel

Nokia Ab and Repligen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nokia Ab and Repligen

The main advantage of trading using opposite Nokia Ab and Repligen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia Ab position performs unexpectedly, Repligen 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 Repligen will offset losses from the drop in Repligen's long position.
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The idea behind Nokia Ab Oy and Repligen Cp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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