Correlation Between NICE Information and Korea Alcohol
Can any of the company-specific risk be diversified away by investing in both NICE Information and Korea Alcohol 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 NICE Information and Korea Alcohol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NICE Information Service and Korea Alcohol Industrial, you can compare the effects of market volatilities on NICE Information and Korea Alcohol 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 NICE Information with a short position of Korea Alcohol. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Information and Korea Alcohol.
Diversification Opportunities for NICE Information and Korea Alcohol
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NICE and Korea is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial and NICE Information 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 NICE Information Service are associated (or correlated) with Korea Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of NICE Information i.e., NICE Information and Korea Alcohol go up and down completely randomly.
Pair Corralation between NICE Information and Korea Alcohol
Assuming the 90 days trading horizon NICE Information Service is expected to generate 1.3 times more return on investment than Korea Alcohol. However, NICE Information is 1.3 times more volatile than Korea Alcohol Industrial. It trades about 0.05 of its potential returns per unit of risk. Korea Alcohol Industrial is currently generating about -0.06 per unit of risk. If you would invest 932,184 in NICE Information Service on October 16, 2024 and sell it today you would earn a total of 203,816 from holding NICE Information Service or generate 21.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NICE Information Service vs. Korea Alcohol Industrial
Performance |
| Timeline |
| NICE Information Service |
| Korea Alcohol Industrial |
NICE Information and Korea Alcohol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NICE Information and Korea Alcohol
The main advantage of trading using opposite NICE Information and Korea Alcohol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Information position performs unexpectedly, Korea Alcohol 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 Korea Alcohol will offset losses from the drop in Korea Alcohol's long position.| NICE Information vs. Daejung Chemicals Metals | NICE Information vs. Shinhan Inverse Copper | NICE Information vs. Lotte Chilsung Beverage | NICE Information vs. Hana Materials |
| Korea Alcohol vs. Innowireless Co | Korea Alcohol vs. Koryo Credit Information | Korea Alcohol vs. NICE Information Service | Korea Alcohol vs. System and Application |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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