Correlation Between Nomad Foods and CGN Power
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and CGN Power 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 Nomad Foods and CGN Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and CGN Power Co, you can compare the effects of market volatilities on Nomad Foods and CGN Power 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 Nomad Foods with a short position of CGN Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and CGN Power.
Diversification Opportunities for Nomad Foods and CGN Power
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nomad and CGN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and CGN Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGN Power and Nomad Foods 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 Nomad Foods are associated (or correlated) with CGN Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGN Power has no effect on the direction of Nomad Foods i.e., Nomad Foods and CGN Power go up and down completely randomly.
Pair Corralation between Nomad Foods and CGN Power
Assuming the 90 days trading horizon Nomad Foods is expected to generate 65.68 times less return on investment than CGN Power. But when comparing it to its historical volatility, Nomad Foods is 6.74 times less risky than CGN Power. It trades about 0.01 of its potential returns per unit of risk. CGN Power Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6.91 in CGN Power Co on October 28, 2024 and sell it today you would earn a total of 21.09 from holding CGN Power Co or generate 305.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nomad Foods vs. CGN Power Co
Performance |
| Timeline |
| Nomad Foods |
| CGN Power |
Nomad Foods and CGN Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and CGN Power
The main advantage of trading using opposite Nomad Foods and CGN Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, CGN Power 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 CGN Power will offset losses from the drop in CGN Power's long position.| Nomad Foods vs. Playa Hotels Resorts | Nomad Foods vs. TRAVEL LEISURE DL 01 | Nomad Foods vs. LG Display Co | Nomad Foods vs. UNIVERSAL DISPLAY |
| CGN Power vs. Soken Chemical Engineering | CGN Power vs. China BlueChemical | CGN Power vs. PLAY2CHILL SA ZY | CGN Power vs. PLAYMATES TOYS |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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