Correlation Between Nice Information and ED
Can any of the company-specific risk be diversified away by investing in both Nice Information and ED 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 ED 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 ED Co, you can compare the effects of market volatilities on Nice Information and ED 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 ED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice Information and ED.
Diversification Opportunities for Nice Information and ED
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nice and ED is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nice Information Telecommunica and ED Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ED Co 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 ED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ED Co has no effect on the direction of Nice Information i.e., Nice Information and ED go up and down completely randomly.
Pair Corralation between Nice Information and ED
Assuming the 90 days trading horizon Nice Information Telecommunication is expected to generate 0.12 times more return on investment than ED. However, Nice Information Telecommunication is 8.53 times less risky than ED. It trades about -0.15 of its potential returns per unit of risk. ED Co is currently generating about -0.07 per unit of risk. If you would invest 1,930,000 in Nice Information Telecommunication on September 2, 2024 and sell it today you would lose (89,000) from holding Nice Information Telecommunication or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice Information Telecommunica vs. ED Co
Performance |
| Timeline |
| Nice Information Tel |
| ED Co |
Nice Information and ED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice Information and ED
The main advantage of trading using opposite Nice Information and ED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice Information position performs unexpectedly, ED 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 ED will offset losses from the drop in ED's long position.| Nice Information vs. Dongsin Engineering Construction | Nice Information vs. Doosan Fuel Cell | Nice Information vs. Daishin Balance 1 | Nice Information vs. Total Soft Bank |
| ED vs. Ssangyong Information Communication | ED vs. Mobileleader CoLtd | ED vs. Shinsegae Information Communication | ED vs. Display Tech Co |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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