Correlation Between CMC Investment and Nafoods Group
Can any of the company-specific risk be diversified away by investing in both CMC Investment and Nafoods Group 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 CMC Investment and Nafoods Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Investment JSC and Nafoods Group JSC, you can compare the effects of market volatilities on CMC Investment and Nafoods Group 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 CMC Investment with a short position of Nafoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Investment and Nafoods Group.
Diversification Opportunities for CMC Investment and Nafoods Group
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CMC and Nafoods is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding CMC Investment JSC and Nafoods Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafoods Group JSC and CMC Investment 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 CMC Investment JSC are associated (or correlated) with Nafoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafoods Group JSC has no effect on the direction of CMC Investment i.e., CMC Investment and Nafoods Group go up and down completely randomly.
Pair Corralation between CMC Investment and Nafoods Group
Assuming the 90 days trading horizon CMC Investment is expected to generate 1.07 times less return on investment than Nafoods Group. In addition to that, CMC Investment is 2.57 times more volatile than Nafoods Group JSC. It trades about 0.02 of its total potential returns per unit of risk. Nafoods Group JSC is currently generating about 0.07 per unit of volatility. If you would invest 1,413,636 in Nafoods Group JSC on August 29, 2024 and sell it today you would earn a total of 606,364 from holding Nafoods Group JSC or generate 42.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.09% |
| Values | Daily Returns |
CMC Investment JSC vs. Nafoods Group JSC
Performance |
| Timeline |
| CMC Investment JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nafoods Group JSC |
CMC Investment and Nafoods Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Investment and Nafoods Group
The main advantage of trading using opposite CMC Investment and Nafoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Investment position performs unexpectedly, Nafoods Group 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 Nafoods Group will offset losses from the drop in Nafoods Group's long position.| CMC Investment vs. FIT INVEST JSC | CMC Investment vs. Damsan JSC | CMC Investment vs. An Phat Plastic | CMC Investment vs. Alphanam ME |
| Nafoods Group vs. FIT INVEST JSC | Nafoods Group vs. Damsan JSC | Nafoods Group vs. An Phat Plastic | Nafoods Group vs. Alphanam ME |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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