Correlation Between NICE Total and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both NICE Total and Dongnam Chemical 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 Total and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NICE Total Cash and Dongnam Chemical Co, you can compare the effects of market volatilities on NICE Total and Dongnam Chemical 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 Total with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Total and Dongnam Chemical.
Diversification Opportunities for NICE Total and Dongnam Chemical
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NICE and Dongnam is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NICE Total Cash and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and NICE Total 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 Total Cash are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of NICE Total i.e., NICE Total and Dongnam Chemical go up and down completely randomly.
Pair Corralation between NICE Total and Dongnam Chemical
Assuming the 90 days trading horizon NICE Total Cash is expected to generate 2.0 times more return on investment than Dongnam Chemical. However, NICE Total is 2.0 times more volatile than Dongnam Chemical Co. It trades about -0.01 of its potential returns per unit of risk. Dongnam Chemical Co is currently generating about -0.2 per unit of risk. If you would invest 486,500 in NICE Total Cash on September 13, 2024 and sell it today you would lose (4,500) from holding NICE Total Cash or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NICE Total Cash vs. Dongnam Chemical Co
Performance |
| Timeline |
| NICE Total Cash |
| Dongnam Chemical |
NICE Total and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NICE Total and Dongnam Chemical
The main advantage of trading using opposite NICE Total and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Total position performs unexpectedly, Dongnam Chemical 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| NICE Total vs. Korea New Network | NICE Total vs. Solution Advanced Technology | NICE Total vs. Busan Industrial Co | NICE Total vs. Busan Ind |
| Dongnam Chemical vs. Samsung Electronics Co | Dongnam Chemical vs. Samsung Electronics Co | Dongnam Chemical vs. SK Hynix | Dongnam Chemical vs. POSCO Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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