Correlation Between The9 and Nice

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Can any of the company-specific risk be diversified away by investing in both The9 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 The9 and Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The9 Ltd ADR and Nice Ltd ADR, you can compare the effects of market volatilities on The9 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 The9 with a short position of Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of The9 and Nice.

Diversification Opportunities for The9 and Nice

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between The9 and Nice is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding The9 Ltd ADR and Nice Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Ltd ADR and The9 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 The9 Ltd ADR 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 Ltd ADR has no effect on the direction of The9 i.e., The9 and Nice go up and down completely randomly.

Pair Corralation between The9 and Nice

Given the investment horizon of 90 days The9 is expected to generate 5.37 times less return on investment than Nice. In addition to that, The9 is 1.18 times more volatile than Nice Ltd ADR. It trades about 0.02 of its total potential returns per unit of risk. Nice Ltd ADR is currently generating about 0.1 per unit of volatility. If you would invest  18,563  in Nice Ltd ADR on September 2, 2022 and sell it today you would earn a total of  1,653  from holding Nice Ltd ADR or generate 8.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

The9 Ltd ADR  vs.  Nice Ltd ADR

 Performance (%) 
       Timeline  
The9 Ltd ADR 
The9 Performance
0 of 100
Over the last 90 days The9 Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

The9 Price Channel

Nice Ltd ADR 
Nice Performance
0 of 100
Over the last 90 days Nice Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Nice is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nice Price Channel

The9 and Nice Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with The9 and Nice

The main advantage of trading using opposite The9 and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The9 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.
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The idea behind The9 Ltd ADR and Nice Ltd ADR 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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