Correlation Between NICE Information and UJU Electronics

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

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

Diversification Opportunities for NICE Information and UJU Electronics

0.45

Correlation Coefficient

NICE Information  UJU Electronics

Very weak diversification

The 3 months correlation between NICE and UJU is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and UJU Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UJU Electronics and NICE Information 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 Information Service are associated (or correlated) with UJU Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UJU Electronics has no effect on the direction of NICE Information i.e., NICE Information and UJU Electronics go up and down completely randomly.

Pair Corralation between NICE Information and UJU Electronics

Assuming the 90 days trading horizon NICE Information is expected to generate 20.36 times less return on investment than UJU Electronics. But when comparing it to its historical volatility, NICE Information Service is 2.16 times less risky than UJU Electronics. It trades about 0.02 of its potential returns per unit of risk. UJU Electronics Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,690,000  in UJU Electronics Co on December 30, 2024 and sell it today you would earn a total of  910,000  from holding UJU Electronics Co or generate 53.85% return on investment over 90 days.

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

NICE Information Service  vs.  UJU Electronics Co

NICE Information Service

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NICE Information Service are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NICE Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UJU Electronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UJU Electronics Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UJU Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NICE Information and UJU Electronics

The main advantage of trading using opposite NICE Information and UJU Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Information position performs unexpectedly, UJU Electronics 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 UJU Electronics will offset losses from the drop in UJU Electronics' long position.

The idea behind NICE Information Service and UJU Electronics Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.