Correlation Between ENERGYMACHINERY KOREA and NICE Information
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA and NICE Information 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 ENERGYMACHINERY KOREA and NICE Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and NICE Information Service, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA and NICE Information 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 ENERGYMACHINERY KOREA with a short position of NICE Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and NICE Information.
Diversification Opportunities for ENERGYMACHINERY KOREA and NICE Information
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ENERGYMACHINERY and NICE is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and NICE Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Information Service and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd are associated (or correlated) with NICE Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Information Service has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and NICE Information go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and NICE Information
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to generate 1.08 times more return on investment than NICE Information. However, ENERGYMACHINERY KOREA is 1.08 times more volatile than NICE Information Service. It trades about 0.19 of its potential returns per unit of risk. NICE Information Service is currently generating about -0.08 per unit of risk. If you would invest 216,500 in ENERGYMACHINERY KOREA CoLtd on October 21, 2024 and sell it today you would earn a total of 17,000 from holding ENERGYMACHINERY KOREA CoLtd or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. NICE Information Service
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| NICE Information Service |
ENERGYMACHINERY KOREA and NICE Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and NICE Information
The main advantage of trading using opposite ENERGYMACHINERY KOREA and NICE Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA position performs unexpectedly, NICE Information 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 NICE Information will offset losses from the drop in NICE Information's long position.The idea behind ENERGYMACHINERY KOREA CoLtd and NICE Information Service pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 CEOs Directory module to screen CEOs from public companies around the world.
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