Correlation Between NICE Information and AptaBio Therapeutics

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

Diversification Opportunities for NICE Information and AptaBio Therapeutics

-0.56

Correlation Coefficient

NICE Information  AptaBio Therapeutics

Excellent diversification

The 3 months correlation between NICE and AptaBio is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and AptaBio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptaBio Therapeutics 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 AptaBio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptaBio Therapeutics has no effect on the direction of NICE Information i.e., NICE Information and AptaBio Therapeutics go up and down completely randomly.

Pair Corralation between NICE Information and AptaBio Therapeutics

Assuming the 90 days trading horizon NICE Information is expected to generate 12.45 times less return on investment than AptaBio Therapeutics. But when comparing it to its historical volatility, NICE Information Service is 1.47 times less risky than AptaBio Therapeutics. It trades about 0.01 of its potential returns per unit of risk. AptaBio Therapeutics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  644,000  in AptaBio Therapeutics on October 6, 2024 and sell it today you would earn a total of  21,000  from holding AptaBio Therapeutics or generate 3.26% return on investment over 90 days.

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

NICE Information Service  vs.  AptaBio Therapeutics

NICE Information Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NICE Information Service are ranked lower than 8 (%) 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.

AptaBio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AptaBio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NICE Information and AptaBio Therapeutics

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

The idea behind NICE Information Service and AptaBio Therapeutics 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.