Correlation Between Photon Energy and Nokia Oyj

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

By analyzing existing cross correlation between Photon Energy NV and Nokia Oyj, you can compare the effects of market volatilities on Photon Energy and Nokia Oyj 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 Photon Energy with a short position of Nokia Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photon Energy and Nokia Oyj.

Diversification Opportunities for Photon Energy and Nokia Oyj

0.54

Correlation Coefficient

Photon Energy  Nokia Oyj

Very weak diversification

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

Pair Corralation between Photon Energy and Nokia Oyj

Assuming the 90 days trading horizon Photon Energy NV is expected to generate 0.83 times more return on investment than Nokia Oyj. However, Photon Energy NV is 1.21 times less risky than Nokia Oyj. It trades about -0.08 of its potential returns per unit of risk. Nokia Oyj is currently generating about -0.08 per unit of risk. If you would invest  2,020  in Photon Energy NV on April 24, 2025 and sell it today you would lose (180.00) from holding Photon Energy NV or give up 8.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Photon Energy NV  vs.  Nokia Oyj

Photon Energy NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Photon Energy NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Nokia Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nokia Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Photon Energy and Nokia Oyj

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

The idea behind Photon Energy NV and Nokia Oyj 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.