Correlation Between Kmw and NICE Information

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

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

Diversification Opportunities for Kmw and NICE Information

0.51

Correlation Coefficient

Kmw  NICE Information

Very weak diversification

The 3 months correlation between Kmw and NICE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kmw Inc and NICE Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Information Service and Kmw 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 Kmw Inc are associated (or correlated) with NICE Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Information Service has no effect on the direction of Kmw i.e., Kmw and NICE Information go up and down completely randomly.

Pair Corralation between Kmw and NICE Information

Assuming the 90 days trading horizon Kmw Inc is expected to under-perform the NICE Information. In addition to that, Kmw is 1.57 times more volatile than NICE Information Service. It trades about -0.06 of its total potential returns per unit of risk. NICE Information Service is currently generating about 0.18 per unit of volatility. If you would invest  1,156,000  in NICE Information Service on September 22, 2024 and sell it today you would earn a total of  83,000  from holding NICE Information Service or generate 7.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Kmw Inc  vs.  NICE Information Service

Kmw Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kmw Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kmw may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NICE Information Service

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NICE Information Service are ranked lower than 13 (%) 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.

Pair Trading with Kmw and NICE Information

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

The idea behind Kmw Inc and NICE Information Service 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .