Correlation Between Microfriend and NICE Total
Can any of the company-specific risk be diversified away by investing in both Microfriend and NICE Total 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 Microfriend and NICE Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and NICE Total Cash, you can compare the effects of market volatilities on Microfriend and NICE Total 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 Microfriend with a short position of NICE Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and NICE Total.
Diversification Opportunities for Microfriend and NICE Total
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microfriend and NICE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and NICE Total Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Total Cash and Microfriend 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 Microfriend are associated (or correlated) with NICE Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Total Cash has no effect on the direction of Microfriend i.e., Microfriend and NICE Total go up and down completely randomly.
Pair Corralation between Microfriend and NICE Total
Assuming the 90 days trading horizon Microfriend is expected to under-perform the NICE Total. In addition to that, Microfriend is 2.82 times more volatile than NICE Total Cash. It trades about -0.45 of its total potential returns per unit of risk. NICE Total Cash is currently generating about -0.29 per unit of volatility. If you would invest 505,000 in NICE Total Cash on September 4, 2024 and sell it today you would lose (36,000) from holding NICE Total Cash or give up 7.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. NICE Total Cash
Performance |
| Timeline |
| Microfriend |
| NICE Total Cash |
Microfriend and NICE Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and NICE Total
The main advantage of trading using opposite Microfriend and NICE Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, NICE Total 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 Total will offset losses from the drop in NICE Total's long position.| Microfriend vs. PI Advanced Materials | Microfriend vs. Lake Materials Co | Microfriend vs. Hyosung Advanced Materials | Microfriend vs. Stic Investments |
| NICE Total vs. Hansol Homedeco Co | NICE Total vs. Amogreentech Co | NICE Total vs. RFTech Co | NICE Total vs. Shinsung Delta Tech |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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