Correlation Between SUNBIRD HOTELS and NICO HOLDINGS

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

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

Diversification Opportunities for SUNBIRD HOTELS and NICO HOLDINGS

0.7

Correlation Coefficient

SUNBIRD HOTELS  NICO HOLDINGS

Poor diversification

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

Pair Corralation between SUNBIRD HOTELS and NICO HOLDINGS

Assuming the 90 days trading horizon SUNBIRD HOTELS is expected to generate 8.25 times less return on investment than NICO HOLDINGS. But when comparing it to its historical volatility, SUNBIRD HOTELS TOURISM is 2.37 times less risky than NICO HOLDINGS. It trades about 0.22 of its potential returns per unit of risk. NICO HOLDINGS LIMITED is currently generating about 0.76 of returns per unit of risk over similar time horizon. If you would invest  41,903  in NICO HOLDINGS LIMITED on December 4, 2024 and sell it today you would earn a total of  41,165  from holding NICO HOLDINGS LIMITED or generate 98.24% return on investment over 90 days.

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

SUNBIRD HOTELS TOURISM  vs.  NICO HOLDINGS LIMITED

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.

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.

Pair Trading with SUNBIRD HOTELS and NICO HOLDINGS

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

The idea behind SUNBIRD HOTELS TOURISM and NICO HOLDINGS LIMITED 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.