Correlation Between Nice Information and Union Materials
Can any of the company-specific risk be diversified away by investing in both Nice Information and Union Materials 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 Union Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice Information Telecommunication and Union Materials Corp, you can compare the effects of market volatilities on Nice Information and Union Materials 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 Union Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice Information and Union Materials.
Diversification Opportunities for Nice Information and Union Materials
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nice and Union is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nice Information Telecommunica and Union Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Materials Corp 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 Telecommunication are associated (or correlated) with Union Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Materials Corp has no effect on the direction of Nice Information i.e., Nice Information and Union Materials go up and down completely randomly.
Pair Corralation between Nice Information and Union Materials
Assuming the 90 days trading horizon Nice Information Telecommunication is expected to generate 0.18 times more return on investment than Union Materials. However, Nice Information Telecommunication is 5.7 times less risky than Union Materials. It trades about -0.13 of its potential returns per unit of risk. Union Materials Corp is currently generating about -0.04 per unit of risk. If you would invest 1,868,000 in Nice Information Telecommunication on August 30, 2024 and sell it today you would lose (35,000) from holding Nice Information Telecommunication or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice Information Telecommunica vs. Union Materials Corp
Performance |
| Timeline |
| Nice Information Tel |
| Union Materials Corp |
Nice Information and Union Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice Information and Union Materials
The main advantage of trading using opposite Nice Information and Union Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice Information position performs unexpectedly, Union Materials 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 Union Materials will offset losses from the drop in Union Materials' long position.| Nice Information vs. Daou Data Corp | Nice Information vs. Busan Industrial Co | Nice Information vs. Busan Ind | Nice Information vs. Shinhan WTI Futures |
| Union Materials vs. KMH Hitech Co | Union Materials vs. GemVaxKAEL CoLtd | Union Materials vs. Busan Industrial Co | Union Materials vs. Busan Ind |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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