Correlation Between NICO HOLDINGS and MALAWI PROPERTY

Can any of the company-specific risk be diversified away by investing in both NICO HOLDINGS and MALAWI PROPERTY 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 MALAWI PROPERTY 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 MALAWI PROPERTY INVESTMENT, you can compare the effects of market volatilities on NICO HOLDINGS and MALAWI PROPERTY 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 MALAWI PROPERTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICO HOLDINGS and MALAWI PROPERTY.

Diversification Opportunities for NICO HOLDINGS and MALAWI PROPERTY

0.84

Correlation Coefficient

NICO HOLDINGS  MALAWI PROPERTY

Very poor diversification

The 3 months correlation between NICO and MALAWI is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NICO HOLDINGS LIMITED and MALAWI PROPERTY INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MALAWI PROPERTY INVE 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 MALAWI PROPERTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MALAWI PROPERTY INVE has no effect on the direction of NICO HOLDINGS i.e., NICO HOLDINGS and MALAWI PROPERTY go up and down completely randomly.

Pair Corralation between NICO HOLDINGS and MALAWI PROPERTY

Assuming the 90 days trading horizon NICO HOLDINGS LIMITED is expected to generate 1.3 times more return on investment than MALAWI PROPERTY. However, NICO HOLDINGS is 1.3 times more volatile than MALAWI PROPERTY INVESTMENT. It trades about 0.51 of its potential returns per unit of risk. MALAWI PROPERTY INVESTMENT is currently generating about 0.31 per unit of risk. If you would invest  19,884  in NICO HOLDINGS LIMITED on September 14, 2024 and sell it today you would earn a total of  12,117  from holding NICO HOLDINGS LIMITED or generate 60.94% return on investment over 90 days.

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

NICO HOLDINGS LIMITED  vs.  MALAWI PROPERTY INVESTMENT

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.

MALAWI PROPERTY INVE

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MALAWI PROPERTY INVESTMENT are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, MALAWI PROPERTY displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NICO HOLDINGS and MALAWI PROPERTY

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

The idea behind NICO HOLDINGS LIMITED and MALAWI PROPERTY INVESTMENT 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.