Correlation Between Nokian Renkaat and OppFi

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

Diversification Opportunities for Nokian Renkaat and OppFi

-0.07

Correlation Coefficient

Nokian Renkaat  OppFi

Good diversification

The 3 months correlation between Nokian and OppFi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Renkaat Oyj and OppFi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OppFi Inc 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 OppFi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OppFi Inc has no effect on the direction of Nokian Renkaat i.e., Nokian Renkaat and OppFi go up and down completely randomly.

Pair Corralation between Nokian Renkaat and OppFi

Assuming the 90 days horizon Nokian Renkaat Oyj is expected to under-perform the OppFi. In addition to that, Nokian Renkaat is 1.13 times more volatile than OppFi Inc. It trades about -0.22 of its total potential returns per unit of risk. OppFi Inc is currently generating about -0.06 per unit of volatility. If you would invest  714.00  in OppFi Inc on September 13, 2024 and sell it today you would lose (36.00) from holding OppFi Inc or give up 5.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Nokian Renkaat Oyj  vs.  OppFi Inc

Nokian Renkaat Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nokian Renkaat Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Nokian Renkaat is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

OppFi Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, OppFi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nokian Renkaat and OppFi

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

The idea behind Nokian Renkaat Oyj and OppFi Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.