Correlation Between Black Sea and Nice

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

By analyzing existing cross correlation between Black Sea Property and Nice, you can compare the effects of market volatilities on Black Sea and Nice 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 Black Sea with a short position of Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Sea and Nice.

Diversification Opportunities for Black Sea and Nice

-0.23

Correlation Coefficient

Black Sea  Nice

Very good diversification

The 3 months correlation between Black and Nice is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Black Sea Property and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice and Black Sea 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 Black Sea Property are associated (or correlated) with Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Black Sea i.e., Black Sea and Nice go up and down completely randomly.

Pair Corralation between Black Sea and Nice

Assuming the 90 days trading horizon Black Sea Property is expected to under-perform the Nice. In addition to that, Black Sea is 1.59 times more volatile than Nice. It trades about -0.06 of its total potential returns per unit of risk. Nice is currently generating about 0.04 per unit of volatility. If you would invest  6,228,000  in Nice on September 14, 2024 and sell it today you would earn a total of  529,000  from holding Nice or generate 8.49% return on investment over 90 days.

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

Black Sea Property  vs.  Nice

Black Sea Property

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nice

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Black Sea and Nice

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

The idea behind Black Sea Property and Nice 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.