Correlation Between Lapidoth and Nice

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

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

Diversification Opportunities for Lapidoth and Nice

0.56

Correlation Coefficient

Lapidoth  Nice

Very weak diversification

The 3 months correlation between Lapidoth and Nice is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lapidoth and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice and Lapidoth 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 Lapidoth 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 Lapidoth i.e., Lapidoth and Nice go up and down completely randomly.

Pair Corralation between Lapidoth and Nice

Assuming the 90 days trading horizon Lapidoth is expected to generate 0.62 times more return on investment than Nice. However, Lapidoth is 1.6 times less risky than Nice. It trades about 0.12 of its potential returns per unit of risk. Nice is currently generating about -0.03 per unit of risk. If you would invest  640,048  in Lapidoth on September 26, 2024 and sell it today you would earn a total of  53,852  from holding Lapidoth or generate 8.41% return on investment over 90 days.

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

Lapidoth  vs.  Nice

Lapidoth

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lapidoth are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lapidoth sustained solid returns over the last few months and may actually be approaching a breakup point.

Nice

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lapidoth and Nice

The main advantage of trading using opposite Lapidoth and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lapidoth 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 Lapidoth 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.