Correlation Between NICE Total and IM CoLtd

Can any of the company-specific risk be diversified away by investing in both NICE Total and IM CoLtd 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 NICE Total and IM CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NICE Total Cash and IM CoLtd, you can compare the effects of market volatilities on NICE Total and IM CoLtd 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 NICE Total with a short position of IM CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Total and IM CoLtd.

Diversification Opportunities for NICE Total and IM CoLtd

-0.56

Correlation Coefficient

NICE Total  IM CoLtd

Excellent diversification

The 3 months correlation between NICE and 101390 is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NICE Total Cash and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd and NICE Total 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 NICE Total Cash are associated (or correlated) with IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of NICE Total i.e., NICE Total and IM CoLtd go up and down completely randomly.

Pair Corralation between NICE Total and IM CoLtd

Assuming the 90 days trading horizon NICE Total Cash is expected to under-perform the IM CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, NICE Total Cash is 3.79 times less risky than IM CoLtd. The stock trades about -0.12 of its potential returns per unit of risk. The IM CoLtd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  546,000  in IM CoLtd on February 28, 2024 and sell it today you would earn a total of  131,000  from holding IM CoLtd or generate 23.99% return on investment over 90 days.

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

NICE Total Cash  vs.  IM CoLtd

NICE Total Cash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NICE Total Cash has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

IM CoLtd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IM CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IM CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NICE Total and IM CoLtd

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

The idea behind NICE Total Cash and IM CoLtd 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.