Correlation Between NICE Information and Iljin Display

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

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

Diversification Opportunities for NICE Information and Iljin Display

-0.77

Correlation Coefficient

NICE Information  Iljin Display

Pay attention - limited upside

The 3 months correlation between NICE and Iljin is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display and NICE Information 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 Information Service are associated (or correlated) with Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of NICE Information i.e., NICE Information and Iljin Display go up and down completely randomly.

Pair Corralation between NICE Information and Iljin Display

Assuming the 90 days trading horizon NICE Information Service is expected to generate 1.72 times more return on investment than Iljin Display. However, NICE Information is 1.72 times more volatile than Iljin Display. It trades about 0.15 of its potential returns per unit of risk. Iljin Display is currently generating about -0.2 per unit of risk. If you would invest  1,020,000  in NICE Information Service on September 19, 2024 and sell it today you would earn a total of  195,000  from holding NICE Information Service or generate 19.12% return on investment over 90 days.

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

NICE Information Service  vs.  Iljin Display

NICE Information Service

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NICE Information Service are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NICE Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Iljin Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iljin Display 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NICE Information and Iljin Display

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

The idea behind NICE Information Service and Iljin Display 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.