Correlation Between El Mor and Nice
Can any of the company-specific risk be diversified away by investing in both El Mor 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 El Mor and Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Mor Electric Installation and Nice, you can compare the effects of market volatilities on El Mor 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 El Mor with a short position of Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Mor and Nice.
Diversification Opportunities for El Mor and Nice
Weak diversification
The 3 months correlation between ELMR and Nice is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding El Mor Electric Installation and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice and El Mor 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 El Mor Electric Installation 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 El Mor i.e., El Mor and Nice go up and down completely randomly.
Pair Corralation between El Mor and Nice
Assuming the 90 days trading horizon El Mor is expected to generate 18.71 times less return on investment than Nice. But when comparing it to its historical volatility, El Mor Electric Installation is 1.27 times less risky than Nice. It trades about 0.0 of its potential returns per unit of risk. Nice is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,441,000 in Nice on January 25, 2024 and sell it today you would earn a total of 2,371,000 from holding Nice or generate 36.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Mor Electric Installation vs. Nice
Performance |
| Timeline |
| El Mor Electric |
| Nice |
El Mor and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Mor and Nice
The main advantage of trading using opposite El Mor and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Mor 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 El Mor Electric Installation 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.Check out your portfolio center.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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |