Correlation Between NICO HOLDINGS and NATIONAL INVESTMENT

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

Diversification Opportunities for NICO HOLDINGS and NATIONAL INVESTMENT

0.91

Correlation Coefficient

NICO HOLDINGS  NATIONAL INVESTMENT

Almost no diversification

The 3 months correlation between NICO and NATIONAL is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NICO HOLDINGS LIMITED and NATIONAL INVESTMENT TRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT TRUST 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 NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT TRUST has no effect on the direction of NICO HOLDINGS i.e., NICO HOLDINGS and NATIONAL INVESTMENT go up and down completely randomly.

Pair Corralation between NICO HOLDINGS and NATIONAL INVESTMENT

Assuming the 90 days trading horizon NICO HOLDINGS LIMITED is expected to generate 1.09 times more return on investment than NATIONAL INVESTMENT. However, NICO HOLDINGS is 1.09 times more volatile than NATIONAL INVESTMENT TRUST. It trades about 0.34 of its potential returns per unit of risk. NATIONAL INVESTMENT TRUST is currently generating about 0.22 per unit of risk. If you would invest  41,902  in NICO HOLDINGS LIMITED on December 29, 2024 and sell it today you would earn a total of  35,785  from holding NICO HOLDINGS LIMITED or generate 85.4% return on investment over 90 days.

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

NICO HOLDINGS LIMITED  vs.  NATIONAL INVESTMENT TRUST

NICO HOLDINGS LIMITED

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NICO HOLDINGS LIMITED are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, NICO HOLDINGS unveiled solid returns over the last few months and may actually be approaching a breakup point.

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL INVESTMENT TRUST are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, NATIONAL INVESTMENT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NICO HOLDINGS and NATIONAL INVESTMENT

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

The idea behind NICO HOLDINGS LIMITED and NATIONAL INVESTMENT TRUST 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.