Correlation Between Nokian Renkaat and Zaptec AS

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

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

Diversification Opportunities for Nokian Renkaat and Zaptec AS

0.11

Correlation Coefficient

Nokian Renkaat  Zaptec AS

Average diversification

The 3 months correlation between Nokian and Zaptec is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Renkaat Oyj and Zaptec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zaptec AS and Nokian Renkaat 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 Nokian Renkaat Oyj are associated (or correlated) with Zaptec AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zaptec AS has no effect on the direction of Nokian Renkaat i.e., Nokian Renkaat and Zaptec AS go up and down completely randomly.

Pair Corralation between Nokian Renkaat and Zaptec AS

Assuming the 90 days trading horizon Nokian Renkaat is expected to generate 2.14 times less return on investment than Zaptec AS. But when comparing it to its historical volatility, Nokian Renkaat Oyj is 1.26 times less risky than Zaptec AS. It trades about 0.12 of its potential returns per unit of risk. Zaptec AS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,644  in Zaptec AS on April 23, 2025 and sell it today you would earn a total of  746.00  from holding Zaptec AS or generate 45.38% return on investment over 90 days.

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

Nokian Renkaat Oyj  vs.  Zaptec AS

Nokian Renkaat Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nokian Renkaat Oyj are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Nokian Renkaat demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Zaptec AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zaptec AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Zaptec AS disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nokian Renkaat and Zaptec AS

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

The idea behind Nokian Renkaat Oyj and Zaptec AS 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.