Correlation Between Nice Information and SIMMTECH

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

By analyzing existing cross correlation between Nice Information Telecommunication and SIMMTECH Co, you can compare the effects of market volatilities on Nice Information and SIMMTECH 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 SIMMTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice Information and SIMMTECH.

Diversification Opportunities for Nice Information and SIMMTECH

0.79

Correlation Coefficient

Nice Information  SIMMTECH

Poor diversification

The 3 months correlation between Nice and SIMMTECH is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Nice Information Telecommunica and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH 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 Telecommunication are associated (or correlated) with SIMMTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMMTECH has no effect on the direction of Nice Information i.e., Nice Information and SIMMTECH go up and down completely randomly.

Pair Corralation between Nice Information and SIMMTECH

Assuming the 90 days trading horizon Nice Information Telecommunication is expected to generate 0.43 times more return on investment than SIMMTECH. However, Nice Information Telecommunication is 2.32 times less risky than SIMMTECH. It trades about -0.07 of its potential returns per unit of risk. SIMMTECH Co is currently generating about -0.16 per unit of risk. If you would invest  2,190,000  in Nice Information Telecommunication on September 20, 2024 and sell it today you would lose (343,000) from holding Nice Information Telecommunication or give up 15.66% of portfolio value over 90 days.

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

Nice Information Telecommunica  vs.  SIMMTECH Co

Nice Information Tel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nice Information Telecommunication has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

SIMMTECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMMTECH Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nice Information and SIMMTECH

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

The idea behind Nice Information Telecommunication and SIMMTECH Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.