Correlation Between NICO HOLDINGS and SUNBIRD HOTELS

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

Diversification Opportunities for NICO HOLDINGS and SUNBIRD HOTELS

0.7

Correlation Coefficient

NICO HOLDINGS  SUNBIRD HOTELS

Poor diversification

The 3 months correlation between NICO and SUNBIRD is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NICO HOLDINGS LIMITED and SUNBIRD HOTELS TOURISM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNBIRD HOTELS TOURISM 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 SUNBIRD HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNBIRD HOTELS TOURISM has no effect on the direction of NICO HOLDINGS i.e., NICO HOLDINGS and SUNBIRD HOTELS go up and down completely randomly.

Pair Corralation between NICO HOLDINGS and SUNBIRD HOTELS

Assuming the 90 days trading horizon NICO HOLDINGS LIMITED is expected to generate 1.74 times more return on investment than SUNBIRD HOTELS. However, NICO HOLDINGS is 1.74 times more volatile than SUNBIRD HOTELS TOURISM. It trades about 0.48 of its potential returns per unit of risk. SUNBIRD HOTELS TOURISM is currently generating about 0.18 per unit of risk. If you would invest  28,703  in NICO HOLDINGS LIMITED on December 4, 2024 and sell it today you would earn a total of  54,365  from holding NICO HOLDINGS LIMITED or generate 189.41% return on investment over 90 days.

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

NICO HOLDINGS LIMITED  vs.  SUNBIRD HOTELS TOURISM

NICO HOLDINGS LIMITED

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NICO HOLDINGS LIMITED are ranked lower than 37 (%) 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.

SUNBIRD HOTELS TOURISM

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SUNBIRD HOTELS TOURISM are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, SUNBIRD HOTELS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NICO HOLDINGS and SUNBIRD HOTELS

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

The idea behind NICO HOLDINGS LIMITED and SUNBIRD HOTELS TOURISM 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.