Correlation Between NH Foods and MCF Energy
Can any of the company-specific risk be diversified away by investing in both NH Foods and MCF Energy 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 MCF Energy 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 MCF Energy, you can compare the effects of market volatilities on NH Foods and MCF Energy 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 MCF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and MCF Energy.
Diversification Opportunities for NH Foods and MCF Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NIPMY and MCF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and MCF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCF Energy 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 MCF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCF Energy has no effect on the direction of NH Foods i.e., NH Foods and MCF Energy go up and down completely randomly.
Pair Corralation between NH Foods and MCF Energy
Assuming the 90 days horizon NH Foods Ltd is expected to generate 0.1 times more return on investment than MCF Energy. However, NH Foods Ltd is 10.27 times less risky than MCF Energy. It trades about 0.09 of its potential returns per unit of risk. MCF Energy is currently generating about -0.04 per unit of risk. If you would invest 1,330 in NH Foods Ltd on September 13, 2024 and sell it today you would earn a total of 370.00 from holding NH Foods Ltd or generate 27.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 97.98% |
| Values | Daily Returns |
NH Foods Ltd vs. MCF Energy
Performance |
| Timeline |
| NH Foods |
| MCF Energy |
NH Foods and MCF Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and MCF Energy
The main advantage of trading using opposite NH Foods and MCF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods position performs unexpectedly, MCF Energy 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 MCF Energy will offset losses from the drop in MCF Energy's long position.The idea behind NH Foods Ltd and MCF Energy 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.| MCF Energy vs. The Joint Corp | MCF Energy vs. NH Foods Ltd | MCF Energy vs. SunOpta | MCF Energy vs. AMCON Distributing |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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