Correlation Between MEDIPOST and Nice Information

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

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

Diversification Opportunities for MEDIPOST and Nice Information

-0.42

Correlation Coefficient

MEDIPOST  Nice Information

Very good diversification

The 3 months correlation between MEDIPOST and Nice is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MEDIPOST Co and Nice Information Telecommunica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Information Tel and MEDIPOST 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 MEDIPOST Co 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 Tel has no effect on the direction of MEDIPOST i.e., MEDIPOST and Nice Information go up and down completely randomly.

Pair Corralation between MEDIPOST and Nice Information

Assuming the 90 days trading horizon MEDIPOST Co is expected to generate 4.62 times more return on investment than Nice Information. However, MEDIPOST is 4.62 times more volatile than Nice Information Telecommunication. It trades about 0.11 of its potential returns per unit of risk. Nice Information Telecommunication is currently generating about -0.12 per unit of risk. If you would invest  688,000  in MEDIPOST Co on October 4, 2024 and sell it today you would earn a total of  464,000  from holding MEDIPOST Co or generate 67.44% return on investment over 90 days.

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

MEDIPOST Co  vs.  Nice Information Telecommunica

MEDIPOST

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MEDIPOST Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MEDIPOST sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with MEDIPOST and Nice Information

The main advantage of trading using opposite MEDIPOST and Nice Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDIPOST 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 MEDIPOST Co and Nice Information Telecommunication 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.