Correlation Between NICE Information and Innowireless
Can any of the company-specific risk be diversified away by investing in both NICE Information and Innowireless 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 Innowireless 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 Innowireless Co, you can compare the effects of market volatilities on NICE Information and Innowireless 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 Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Information and Innowireless.
Diversification Opportunities for NICE Information and Innowireless
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NICE and Innowireless is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless 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 Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of NICE Information i.e., NICE Information and Innowireless go up and down completely randomly.
Pair Corralation between NICE Information and Innowireless
Assuming the 90 days trading horizon NICE Information Service is expected to under-perform the Innowireless. But the stock apears to be less risky and, when comparing its historical volatility, NICE Information Service is 1.36 times less risky than Innowireless. The stock trades about -0.29 of its potential returns per unit of risk. The Innowireless Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,045,000 in Innowireless Co on October 16, 2024 and sell it today you would lose (20,000) from holding Innowireless Co or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NICE Information Service vs. Innowireless Co
Performance |
| Timeline |
| NICE Information Service |
| Innowireless |
NICE Information and Innowireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NICE Information and Innowireless
The main advantage of trading using opposite NICE Information and Innowireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Information position performs unexpectedly, Innowireless 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 Innowireless will offset losses from the drop in Innowireless' long position.| NICE Information vs. Haitai Confectionery Foods | NICE Information vs. Asiana Airlines | NICE Information vs. Hankukpackage Co | NICE Information vs. T3 Entertainment Co |
| Innowireless vs. NICE Information Service | Innowireless vs. Iljin Display | Innowireless vs. Lotte Data Communication | Innowireless vs. Ssangyong Information Communication |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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