Correlation Between Nike and Naas Technology
Can any of the company-specific risk be diversified away by investing in both Nike and Naas Technology 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 Nike and Naas Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Naas Technology ADR, you can compare the effects of market volatilities on Nike and Naas Technology 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 Nike with a short position of Naas Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Naas Technology.
Diversification Opportunities for Nike and Naas Technology
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nike and Naas is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Naas Technology ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naas Technology ADR and Nike 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 Nike Inc are associated (or correlated) with Naas Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naas Technology ADR has no effect on the direction of Nike i.e., Nike and Naas Technology go up and down completely randomly.
Pair Corralation between Nike and Naas Technology
Considering the 90-day investment horizon Nike Inc is expected to generate 0.19 times more return on investment than Naas Technology. However, Nike Inc is 5.28 times less risky than Naas Technology. It trades about -0.05 of its potential returns per unit of risk. Naas Technology ADR is currently generating about -0.07 per unit of risk. If you would invest 10,203 in Nike Inc on November 3, 2024 and sell it today you would lose (2,513) from holding Nike Inc or give up 24.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Naas Technology ADR
Performance |
| Timeline |
| Nike Inc |
| Naas Technology ADR |
Nike and Naas Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Naas Technology
The main advantage of trading using opposite Nike and Naas Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Naas Technology 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 Naas Technology will offset losses from the drop in Naas Technology's long position.The idea behind Nike Inc and Naas Technology ADR 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.| Naas Technology vs. Leslies | Naas Technology vs. Sally Beauty Holdings | Naas Technology vs. ODP Corp | Naas Technology vs. 1 800 FLOWERSCOM |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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