Correlation Between Nissin Foods and MTR Corp
Can any of the company-specific risk be diversified away by investing in both Nissin Foods and MTR Corp 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 MTR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nissin Foods Holdings and MTR Corp, you can compare the effects of market volatilities on Nissin Foods and MTR Corp 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 MTR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissin Foods and MTR Corp.
Diversification Opportunities for Nissin Foods and MTR Corp
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nissin and MTR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nissin Foods Holdings and MTR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTR Corp 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 Holdings are associated (or correlated) with MTR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTR Corp has no effect on the direction of Nissin Foods i.e., Nissin Foods and MTR Corp go up and down completely randomly.
Pair Corralation between Nissin Foods and MTR Corp
Assuming the 90 days horizon Nissin Foods Holdings is expected to under-perform the MTR Corp. In addition to that, Nissin Foods is 1.22 times more volatile than MTR Corp. It trades about -0.13 of its total potential returns per unit of risk. MTR Corp is currently generating about 0.05 per unit of volatility. If you would invest 317.00 in MTR Corp on August 28, 2024 and sell it today you would earn a total of 31.00 from holding MTR Corp or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.77% |
| Values | Daily Returns |
Nissin Foods Holdings vs. MTR Corp
Performance |
| Timeline |
| Nissin Foods Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| MTR Corp |
Nissin Foods and MTR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nissin Foods and MTR Corp
The main advantage of trading using opposite Nissin Foods and MTR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissin Foods position performs unexpectedly, MTR Corp 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 MTR Corp will offset losses from the drop in MTR Corp's long position.| Nissin Foods vs. Campbell Soup | Nissin Foods vs. McCormick Company Incorporated | Nissin Foods vs. Hormel Foods | Nissin Foods vs. General Mills |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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