Correlation Between Nafoods Group and MST Investment
Can any of the company-specific risk be diversified away by investing in both Nafoods Group and MST Investment 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 Nafoods Group and MST Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nafoods Group JSC and MST Investment JSC, you can compare the effects of market volatilities on Nafoods Group and MST Investment 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 Nafoods Group with a short position of MST Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nafoods Group and MST Investment.
Diversification Opportunities for Nafoods Group and MST Investment
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nafoods and MST is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nafoods Group JSC and MST Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MST Investment JSC and Nafoods Group 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 Nafoods Group JSC are associated (or correlated) with MST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MST Investment JSC has no effect on the direction of Nafoods Group i.e., Nafoods Group and MST Investment go up and down completely randomly.
Pair Corralation between Nafoods Group and MST Investment
Assuming the 90 days trading horizon Nafoods Group JSC is expected to generate 0.69 times more return on investment than MST Investment. However, Nafoods Group JSC is 1.45 times less risky than MST Investment. It trades about 0.1 of its potential returns per unit of risk. MST Investment JSC is currently generating about 0.04 per unit of risk. If you would invest 800,000 in Nafoods Group JSC on August 28, 2024 and sell it today you would earn a total of 1,135,000 from holding Nafoods Group JSC or generate 141.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nafoods Group JSC vs. MST Investment JSC
Performance |
| Timeline |
| Nafoods Group JSC |
| MST Investment JSC |
Nafoods Group and MST Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nafoods Group and MST Investment
The main advantage of trading using opposite Nafoods Group and MST Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nafoods Group position performs unexpectedly, MST Investment 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 MST Investment will offset losses from the drop in MST Investment's long position.| Nafoods Group vs. Dong A Hotel | Nafoods Group vs. Riverway Management JSC | Nafoods Group vs. Danang Education Investment | Nafoods Group vs. Global Electrical Technology |
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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 the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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