Correlation Between Nice Information and Bookook Steel

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

By analyzing existing cross correlation between Nice Information Telecommunication and Bookook Steel, you can compare the effects of market volatilities on Nice Information and Bookook Steel 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 Bookook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice Information and Bookook Steel.

Diversification Opportunities for Nice Information and Bookook Steel

0.81

Correlation Coefficient

Nice Information  Bookook Steel

Very poor diversification

The 3 months correlation between Nice and Bookook is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nice Information Telecommunica and Bookook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bookook Steel 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 Telecommunication are associated (or correlated) with Bookook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bookook Steel has no effect on the direction of Nice Information i.e., Nice Information and Bookook Steel go up and down completely randomly.

Pair Corralation between Nice Information and Bookook Steel

Assuming the 90 days trading horizon Nice Information Telecommunication is expected to under-perform the Bookook Steel. But the stock apears to be less risky and, when comparing its historical volatility, Nice Information Telecommunication is 1.71 times less risky than Bookook Steel. The stock trades about -0.13 of its potential returns per unit of risk. The Bookook Steel is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  296,500  in Bookook Steel on September 26, 2024 and sell it today you would lose (44,500) from holding Bookook Steel or give up 15.01% of portfolio value over 90 days.

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

Nice Information Telecommunica  vs.  Bookook Steel

Nice Information Tel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nice Information Telecommunication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nice Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bookook Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bookook Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bookook Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nice Information and Bookook Steel

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

The idea behind Nice Information Telecommunication and Bookook Steel 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.