Correlation Between DB Financial and NICE Information

Can any of the company-specific risk be diversified away by investing in both DB Financial 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 DB Financial and NICE Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DB Financial Investment and NICE Information Service, you can compare the effects of market volatilities on DB Financial 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 DB Financial with a short position of NICE Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Financial and NICE Information.

Diversification Opportunities for DB Financial and NICE Information

-0.32

Correlation Coefficient

DB Financial  NICE Information

Very good diversification

The 3 months correlation between 016610 and NICE is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding DB Financial Investment 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 DB Financial 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 DB Financial Investment 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 DB Financial i.e., DB Financial and NICE Information go up and down completely randomly.

Pair Corralation between DB Financial and NICE Information

Assuming the 90 days trading horizon DB Financial Investment is expected to under-perform the NICE Information. In addition to that, DB Financial is 1.11 times more volatile than NICE Information Service. It trades about 0.0 of its total potential returns per unit of risk. NICE Information Service is currently generating about 0.08 per unit of volatility. If you would invest  1,206,000  in NICE Information Service on October 1, 2024 and sell it today you would earn a total of  36,000  from holding NICE Information Service or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DB Financial Investment  vs.  NICE Information Service

DB Financial Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DB Financial Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NICE Information Service

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NICE Information Service are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NICE Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DB Financial and NICE Information

The main advantage of trading using opposite DB Financial and NICE Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Financial 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 DB Financial Investment 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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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.