Correlation Between NICO HOLDINGS and TELEKOM NETWORK

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

Diversification Opportunities for NICO HOLDINGS and TELEKOM NETWORK

0.62

Correlation Coefficient

NICO HOLDINGS  TELEKOM NETWORK

Poor diversification

The 3 months correlation between NICO and TELEKOM is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NICO HOLDINGS LIMITED and TELEKOM NETWORK MALAWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELEKOM NETWORK MALAWI 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 TELEKOM NETWORK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELEKOM NETWORK MALAWI has no effect on the direction of NICO HOLDINGS i.e., NICO HOLDINGS and TELEKOM NETWORK go up and down completely randomly.

Pair Corralation between NICO HOLDINGS and TELEKOM NETWORK

Assuming the 90 days trading horizon NICO HOLDINGS LIMITED is expected to generate 0.65 times more return on investment than TELEKOM NETWORK. However, NICO HOLDINGS LIMITED is 1.54 times less risky than TELEKOM NETWORK. It trades about 0.35 of its potential returns per unit of risk. TELEKOM NETWORK MALAWI is currently generating about 0.03 per unit of risk. If you would invest  41,903  in NICO HOLDINGS LIMITED on December 21, 2024 and sell it today you would earn a total of  36,021  from holding NICO HOLDINGS LIMITED or generate 85.96% 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.  TELEKOM NETWORK MALAWI

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 27 (%) 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.

TELEKOM NETWORK MALAWI

Risk-Adjusted Performance

Weak

Over the last 90 days TELEKOM NETWORK MALAWI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, TELEKOM NETWORK may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NICO HOLDINGS and TELEKOM NETWORK

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

The idea behind NICO HOLDINGS LIMITED and TELEKOM NETWORK MALAWI 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.