Correlation Between KTB Investment and NICE Total

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

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

Diversification Opportunities for KTB Investment and NICE Total

-0.1

Correlation Coefficient

KTB Investment  NICE Total

Good diversification

The 3 months correlation between KTB and NICE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding KTB Investment Securities and NICE Total Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Total Cash and KTB Investment 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 KTB Investment Securities are associated (or correlated) with NICE Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Total Cash has no effect on the direction of KTB Investment i.e., KTB Investment and NICE Total go up and down completely randomly.

Pair Corralation between KTB Investment and NICE Total

Assuming the 90 days trading horizon KTB Investment Securities is expected to generate 1.74 times more return on investment than NICE Total. However, KTB Investment is 1.74 times more volatile than NICE Total Cash. It trades about 0.13 of its potential returns per unit of risk. NICE Total Cash is currently generating about 0.2 per unit of risk. If you would invest  298,619  in KTB Investment Securities on December 30, 2024 and sell it today you would earn a total of  48,381  from holding KTB Investment Securities or generate 16.2% return on investment over 90 days.

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

KTB Investment Securities  vs.  NICE Total Cash

KTB Investment Securities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KTB Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

NICE Total Cash

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NICE Total Cash are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NICE Total sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KTB Investment and NICE Total

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

The idea behind KTB Investment Securities and NICE Total Cash 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.