Correlation Between NISSIN FOODS and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both NISSIN FOODS and ALGOMA STEEL 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 NISSIN FOODS and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NISSIN FOODS HLDGS and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on NISSIN FOODS and ALGOMA STEEL 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 NISSIN FOODS with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSIN FOODS and ALGOMA STEEL.
Diversification Opportunities for NISSIN FOODS and ALGOMA STEEL
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NISSIN and ALGOMA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NISSIN FOODS HLDGS and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP and NISSIN 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 NISSIN FOODS HLDGS are associated (or correlated) with ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of NISSIN FOODS i.e., NISSIN FOODS and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between NISSIN FOODS and ALGOMA STEEL
Assuming the 90 days trading horizon NISSIN FOODS HLDGS is expected to under-perform the ALGOMA STEEL. But the stock apears to be less risky and, when comparing its historical volatility, NISSIN FOODS HLDGS is 1.2 times less risky than ALGOMA STEEL. The stock trades about -0.51 of its potential returns per unit of risk. The ALGOMA STEEL GROUP is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest 835.00 in ALGOMA STEEL GROUP on November 27, 2024 and sell it today you would lose (100.00) from holding ALGOMA STEEL GROUP or give up 11.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NISSIN FOODS HLDGS vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| NISSIN FOODS HLDGS |
| ALGOMA STEEL GROUP |
NISSIN FOODS and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NISSIN FOODS and ALGOMA STEEL
The main advantage of trading using opposite NISSIN FOODS and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSIN FOODS position performs unexpectedly, ALGOMA STEEL 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| NISSIN FOODS vs. PARKEN Sport Entertainment | NISSIN FOODS vs. ON Semiconductor | NISSIN FOODS vs. Nordic Semiconductor ASA | NISSIN FOODS vs. SQUIRREL MEDIA SA |
| ALGOMA STEEL vs. FIREWEED METALS P | ALGOMA STEEL vs. Hyatt Hotels | ALGOMA STEEL vs. Ringmetall SE | ALGOMA STEEL vs. Xenia Hotels Resorts |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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