Correlation Between NICE Information and LEENO Industrial

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

Diversification Opportunities for NICE Information and LEENO Industrial

0.15

Correlation Coefficient

NICE Information  LEENO Industrial

Average diversification

The 3 months correlation between NICE and LEENO is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and LEENO Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEENO Industrial 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 LEENO Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEENO Industrial has no effect on the direction of NICE Information i.e., NICE Information and LEENO Industrial go up and down completely randomly.

Pair Corralation between NICE Information and LEENO Industrial

Assuming the 90 days trading horizon NICE Information Service is expected to generate 0.54 times more return on investment than LEENO Industrial. However, NICE Information Service is 1.85 times less risky than LEENO Industrial. It trades about 0.04 of its potential returns per unit of risk. LEENO Industrial is currently generating about 0.01 per unit of risk. If you would invest  1,155,049  in NICE Information Service on December 31, 2024 and sell it today you would earn a total of  34,951  from holding NICE Information Service or generate 3.03% return on investment over 90 days.

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

NICE Information Service  vs.  LEENO Industrial

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 3 (%) 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.

LEENO Industrial

Risk-Adjusted Performance

Weak

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

Pair Trading with NICE Information and LEENO Industrial

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

The idea behind NICE Information Service and LEENO Industrial 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.