Correlation Between Harding Loevner and Nicholas

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

By analyzing existing cross correlation between Harding Loevner International and Nicholas Ii Inc, you can compare the effects of market volatilities on Harding Loevner and Nicholas 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 Harding Loevner with a short position of Nicholas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Nicholas.

Diversification Opportunities for Harding Loevner and Nicholas

-0.42

Correlation Coefficient

Harding Loevner  Nicholas

Very good diversification

The 3 months correlation between Harding and Nicholas is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner International and Nicholas Ii Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Ii and Harding Loevner 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 Harding Loevner International are associated (or correlated) with Nicholas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Ii has no effect on the direction of Harding Loevner i.e., Harding Loevner and Nicholas go up and down completely randomly.

Pair Corralation between Harding Loevner and Nicholas

Assuming the 90 days horizon Harding Loevner International is expected to generate 0.86 times more return on investment than Nicholas. However, Harding Loevner International is 1.16 times less risky than Nicholas. It trades about 0.12 of its potential returns per unit of risk. Nicholas Ii Inc is currently generating about -0.07 per unit of risk. If you would invest  2,455  in Harding Loevner International on December 30, 2024 and sell it today you would earn a total of  156.00  from holding Harding Loevner International or generate 6.35% return on investment over 90 days.

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

Harding Loevner International  vs.  Nicholas Ii Inc

Harding Loevner Inte

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harding Loevner International are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Harding Loevner may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nicholas Ii

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nicholas Ii Inc has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nicholas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harding Loevner and Nicholas

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

The idea behind Harding Loevner International and Nicholas Ii Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.