Correlation Between NH Foods and Major Drilling
Can any of the company-specific risk be diversified away by investing in both NH Foods and Major Drilling 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 NH Foods and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Foods and Major Drilling Group, you can compare the effects of market volatilities on NH Foods and Major Drilling 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 NH Foods with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and Major Drilling.
Diversification Opportunities for NH Foods and Major Drilling
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NI6 and Major is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and NH 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 NH Foods are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of NH Foods i.e., NH Foods and Major Drilling go up and down completely randomly.
Pair Corralation between NH Foods and Major Drilling
Assuming the 90 days horizon NH Foods is expected to generate 0.67 times more return on investment than Major Drilling. However, NH Foods is 1.5 times less risky than Major Drilling. It trades about 0.02 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.01 per unit of risk. If you would invest 2,500 in NH Foods on November 7, 2024 and sell it today you would earn a total of 240.00 from holding NH Foods or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Foods vs. Major Drilling Group
Performance |
| Timeline |
| NH Foods |
| Major Drilling Group |
NH Foods and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and Major Drilling
The main advantage of trading using opposite NH Foods and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| NH Foods vs. T Mobile | NH Foods vs. Air Lease | NH Foods vs. ecotel communication ag | NH Foods vs. MAVEN WIRELESS SWEDEN |
| Major Drilling vs. CREO MEDICAL GRP | Major Drilling vs. CVR Medical Corp | Major Drilling vs. ALBIS LEASING AG | Major Drilling vs. Genertec Universal Medical |
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 Stocks Directory module to find actively traded stocks across global markets.
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