Correlation Between Home Product and NSL Foods
Can any of the company-specific risk be diversified away by investing in both Home Product and NSL Foods 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 Home Product and NSL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Product Center and NSL Foods Public, you can compare the effects of market volatilities on Home Product and NSL Foods 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 Home Product with a short position of NSL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and NSL Foods.
Diversification Opportunities for Home Product and NSL Foods
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and NSL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and NSL Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSL Foods Public and Home Product 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 Home Product Center are associated (or correlated) with NSL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSL Foods Public has no effect on the direction of Home Product i.e., Home Product and NSL Foods go up and down completely randomly.
Pair Corralation between Home Product and NSL Foods
Assuming the 90 days trading horizon Home Product Center is expected to generate 0.97 times more return on investment than NSL Foods. However, Home Product Center is 1.03 times less risky than NSL Foods. It trades about -0.1 of its potential returns per unit of risk. NSL Foods Public is currently generating about -0.18 per unit of risk. If you would invest 1,050 in Home Product Center on September 13, 2024 and sell it today you would lose (75.00) from holding Home Product Center or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. NSL Foods Public
Performance |
| Timeline |
| Home Product Center |
| NSL Foods Public |
Home Product and NSL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and NSL Foods
The main advantage of trading using opposite Home Product and NSL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, NSL Foods 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 NSL Foods will offset losses from the drop in NSL Foods' long position.| Home Product vs. Hwa Fong Rubber | Home Product vs. AAPICO Hitech Public | Home Product vs. Haad Thip Public | Home Product vs. Italian Thai Development Public |
| NSL Foods vs. DOHOME | NSL Foods vs. Home Product Center | NSL Foods vs. Thai Steel Cable | NSL Foods vs. SAF Special Steel |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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