Correlation Between Nice and Photomyne
Can any of the company-specific risk be diversified away by investing in both Nice and Photomyne 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 and Photomyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice and Photomyne, you can compare the effects of market volatilities on Nice and Photomyne 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 with a short position of Photomyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice and Photomyne.
Diversification Opportunities for Nice and Photomyne
Weak diversification
The 3 months correlation between Nice and Photomyne is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Photomyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photomyne and Nice 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 are associated (or correlated) with Photomyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photomyne has no effect on the direction of Nice i.e., Nice and Photomyne go up and down completely randomly.
Pair Corralation between Nice and Photomyne
Assuming the 90 days trading horizon Nice is expected to generate 4.27 times more return on investment than Photomyne. However, Nice is 4.27 times more volatile than Photomyne. It trades about 0.01 of its potential returns per unit of risk. Photomyne is currently generating about -0.14 per unit of risk. If you would invest 6,700,000 in Nice on August 29, 2024 and sell it today you would lose (80,000) from holding Nice or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice vs. Photomyne
Performance |
| Timeline |
| Nice |
| Photomyne |
Nice and Photomyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice and Photomyne
The main advantage of trading using opposite Nice and Photomyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice position performs unexpectedly, Photomyne 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 Photomyne will offset losses from the drop in Photomyne's long position.| Nice vs. Elbit Systems | Nice vs. Tower Semiconductor | Nice vs. Bank Leumi Le Israel | Nice vs. Teva Pharmaceutical Industries |
| Photomyne vs. Clal Insurance Enterprises | Photomyne vs. Scope Metals Group | Photomyne vs. Rimon Consulting Management | Photomyne vs. Arad Investment Industrial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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