Correlation Between NICO HOLDINGS and FDH BANK

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

By analyzing existing cross correlation between NICO HOLDINGS LIMITED and FDH BANK PLC, you can compare the effects of market volatilities on NICO HOLDINGS and FDH BANK 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 NICO HOLDINGS with a short position of FDH BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICO HOLDINGS and FDH BANK.

Diversification Opportunities for NICO HOLDINGS and FDH BANK

-0.8

Correlation Coefficient

NICO HOLDINGS  FDH BANK

Pay attention - limited upside

The 3 months correlation between NICO and FDH is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding NICO HOLDINGS LIMITED and FDH BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDH BANK PLC and NICO HOLDINGS 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 NICO HOLDINGS LIMITED are associated (or correlated) with FDH BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDH BANK PLC has no effect on the direction of NICO HOLDINGS i.e., NICO HOLDINGS and FDH BANK go up and down completely randomly.

Pair Corralation between NICO HOLDINGS and FDH BANK

Assuming the 90 days trading horizon NICO HOLDINGS LIMITED is expected to generate 38.03 times more return on investment than FDH BANK. However, NICO HOLDINGS is 38.03 times more volatile than FDH BANK PLC. It trades about 0.28 of its potential returns per unit of risk. FDH BANK PLC is currently generating about -0.18 per unit of risk. If you would invest  19,870  in NICO HOLDINGS LIMITED on September 14, 2024 and sell it today you would earn a total of  12,131  from holding NICO HOLDINGS LIMITED or generate 61.05% return on investment over 90 days.

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

NICO HOLDINGS LIMITED  vs.  FDH BANK PLC

NICO HOLDINGS LIMITED

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NICO HOLDINGS LIMITED are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NICO HOLDINGS unveiled solid returns over the last few months and may actually be approaching a breakup point.

FDH BANK PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FDH BANK PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FDH BANK is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NICO HOLDINGS and FDH BANK

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

The idea behind NICO HOLDINGS LIMITED and FDH BANK PLC 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.