Correlation Between NH Foods and Allient
Can any of the company-specific risk be diversified away by investing in both NH Foods and Allient 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 Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Foods Ltd and Allient, you can compare the effects of market volatilities on NH Foods and Allient 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 Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and Allient.
Diversification Opportunities for NH Foods and Allient
Pay attention - limited upside
The 3 months correlation between NIPMY and Allient is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Ltd are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of NH Foods i.e., NH Foods and Allient go up and down completely randomly.
Pair Corralation between NH Foods and Allient
Assuming the 90 days horizon NH Foods is expected to generate 3.8 times less return on investment than Allient. But when comparing it to its historical volatility, NH Foods Ltd is 7.2 times less risky than Allient. It trades about 0.09 of its potential returns per unit of risk. Allient is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,424 in Allient on September 12, 2024 and sell it today you would earn a total of 311.00 from holding Allient or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
NH Foods Ltd vs. Allient
Performance |
| Timeline |
| NH Foods |
| Allient |
NH Foods and Allient Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and Allient
The main advantage of trading using opposite NH Foods and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.The idea behind NH Foods Ltd and Allient pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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