Correlation Between NICE Information and Robostar CoLtd

Can any of the company-specific risk be diversified away by investing in both NICE Information and Robostar CoLtd 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 Robostar CoLtd 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 Robostar CoLtd, you can compare the effects of market volatilities on NICE Information and Robostar CoLtd 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 Robostar CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Information and Robostar CoLtd.

Diversification Opportunities for NICE Information and Robostar CoLtd

-0.08

Correlation Coefficient

NICE Information  Robostar CoLtd

Good diversification

The 3 months correlation between NICE and Robostar is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and Robostar CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robostar CoLtd 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 Robostar CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robostar CoLtd has no effect on the direction of NICE Information i.e., NICE Information and Robostar CoLtd go up and down completely randomly.

Pair Corralation between NICE Information and Robostar CoLtd

Assuming the 90 days trading horizon NICE Information is expected to generate 6.24 times less return on investment than Robostar CoLtd. But when comparing it to its historical volatility, NICE Information Service is 2.64 times less risky than Robostar CoLtd. It trades about 0.16 of its potential returns per unit of risk. Robostar CoLtd is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,801,000  in Robostar CoLtd on October 10, 2024 and sell it today you would earn a total of  694,000  from holding Robostar CoLtd or generate 38.53% return on investment over 90 days.

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

NICE Information Service  vs.  Robostar CoLtd

NICE Information Service

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NICE Information Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NICE Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Robostar CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Robostar CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Robostar CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NICE Information and Robostar CoLtd

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

The idea behind NICE Information Service and Robostar CoLtd 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.