Correlation Between NH Foods and Merit Medical
Can any of the company-specific risk be diversified away by investing in both NH Foods and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on NH Foods and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and Merit Medical.
Diversification Opportunities for NH Foods and Merit Medical
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NIPMY and Merit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of NH Foods i.e., NH Foods and Merit Medical go up and down completely randomly.
Pair Corralation between NH Foods and Merit Medical
Assuming the 90 days horizon NH Foods is expected to generate 1.84 times less return on investment than Merit Medical. But when comparing it to its historical volatility, NH Foods Ltd is 2.79 times less risky than Merit Medical. It trades about 0.09 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,954 in Merit Medical Systems on August 31, 2024 and sell it today you would earn a total of 3,436 from holding Merit Medical Systems or generate 49.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
NH Foods Ltd vs. Merit Medical Systems
Performance |
| Timeline |
| NH Foods |
| Merit Medical Systems |
NH Foods and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and Merit Medical
The main advantage of trading using opposite NH Foods and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| NH Foods vs. The A2 Milk | NH Foods vs. Altavoz Entertainment | NH Foods vs. Artisan Consumer Goods | NH Foods vs. General Mills |
| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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