Correlation Between NICE Information and LEENO Industrial
Can any of the company-specific risk be diversified away by investing in both NICE Information and LEENO Industrial 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 LEENO Industrial 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 LEENO Industrial, you can compare the effects of market volatilities on NICE Information and LEENO Industrial 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 LEENO Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Information and LEENO Industrial.
Diversification Opportunities for NICE Information and LEENO Industrial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NICE and LEENO is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and LEENO Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEENO 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 LEENO Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEENO Industrial has no effect on the direction of NICE Information i.e., NICE Information and LEENO Industrial go up and down completely randomly.
Pair Corralation between NICE Information and LEENO Industrial
Assuming the 90 days trading horizon NICE Information is expected to generate 1.36 times less return on investment than LEENO Industrial. But when comparing it to its historical volatility, NICE Information Service is 1.6 times less risky than LEENO Industrial. It trades about 0.14 of its potential returns per unit of risk. LEENO Industrial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 20,300,000 in LEENO Industrial on November 8, 2024 and sell it today you would earn a total of 1,300,000 from holding LEENO Industrial or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NICE Information Service vs. LEENO Industrial
Performance |
| Timeline |
| NICE Information Service |
| LEENO Industrial |
NICE Information and LEENO Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NICE Information and LEENO Industrial
The main advantage of trading using opposite NICE Information and LEENO Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Information position performs unexpectedly, LEENO Industrial 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 LEENO Industrial will offset losses from the drop in LEENO Industrial's long position.| NICE Information vs. Samsung Card Co | NICE Information vs. EBEST Investment Securities | NICE Information vs. Koh Young Technology | NICE Information vs. Hansol Chemica |
| LEENO Industrial vs. Tokai Carbon Korea | LEENO Industrial vs. LF Co | LEENO Industrial vs. Koh Young Technology |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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