Correlation Between Nice and Sapiens International

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

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

Diversification Opportunities for Nice and Sapiens International

0.04

Correlation Coefficient

Nice  Sapiens International

Significant diversification

The 3 months correlation between Nice and Sapiens is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International and Nice 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 are associated (or correlated) with Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Nice i.e., Nice and Sapiens International go up and down completely randomly.

Pair Corralation between Nice and Sapiens International

Assuming the 90 days trading horizon Nice is expected to under-perform the Sapiens International. In addition to that, Nice is 2.13 times more volatile than Sapiens International. It trades about -0.01 of its total potential returns per unit of risk. Sapiens International is currently generating about 0.06 per unit of volatility. If you would invest  975,000  in Sapiens International on December 30, 2024 and sell it today you would earn a total of  44,000  from holding Sapiens International or generate 4.51% return on investment over 90 days.

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

Nice  vs.  Sapiens International

Nice

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nice has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sapiens International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sapiens International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nice and Sapiens International

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

The idea behind Nice and Sapiens International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.