Correlation Between Sports Gear and Niko Semiconductor

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

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

Diversification Opportunities for Sports Gear and Niko Semiconductor

0.46

Correlation Coefficient

Sports Gear  Niko Semiconductor

Very weak diversification

The 3 months correlation between Sports and Niko is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sports Gear Co and Niko Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niko Semiconductor and Sports Gear 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 Sports Gear Co are associated (or correlated) with Niko Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niko Semiconductor has no effect on the direction of Sports Gear i.e., Sports Gear and Niko Semiconductor go up and down completely randomly.

Pair Corralation between Sports Gear and Niko Semiconductor

Assuming the 90 days trading horizon Sports Gear Co is expected to under-perform the Niko Semiconductor. In addition to that, Sports Gear is 1.42 times more volatile than Niko Semiconductor Co. It trades about -0.14 of its total potential returns per unit of risk. Niko Semiconductor Co is currently generating about -0.06 per unit of volatility. If you would invest  5,130  in Niko Semiconductor Co on September 15, 2024 and sell it today you would lose (180.00) from holding Niko Semiconductor Co or give up 3.51% of portfolio value over 90 days.

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

Sports Gear Co  vs.  Niko Semiconductor Co

Sports Gear

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sports Gear Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sports Gear showed solid returns over the last few months and may actually be approaching a breakup point.

Niko Semiconductor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Niko Semiconductor Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Niko Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sports Gear and Niko Semiconductor

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

The idea behind Sports Gear Co and Niko Semiconductor 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.