Correlation Between Nova Organic and Food Moments
Can any of the company-specific risk be diversified away by investing in both Nova Organic and Food Moments 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 Nova Organic and Food Moments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Organic PCL and Food Moments PCL, you can compare the effects of market volatilities on Nova Organic and Food Moments 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 Nova Organic with a short position of Food Moments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Organic and Food Moments.
Diversification Opportunities for Nova Organic and Food Moments
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nova and Food is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nova Organic PCL and Food Moments PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Moments PCL and Nova Organic 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 Nova Organic PCL are associated (or correlated) with Food Moments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Moments PCL has no effect on the direction of Nova Organic i.e., Nova Organic and Food Moments go up and down completely randomly.
Pair Corralation between Nova Organic and Food Moments
Assuming the 90 days horizon Nova Organic PCL is expected to under-perform the Food Moments. But the stock apears to be less risky and, when comparing its historical volatility, Nova Organic PCL is 1.06 times less risky than Food Moments. The stock trades about -0.43 of its potential returns per unit of risk. The Food Moments PCL is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 418.00 in Food Moments PCL on August 29, 2024 and sell it today you would lose (22.00) from holding Food Moments PCL or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Organic PCL vs. Food Moments PCL
Performance |
| Timeline |
| Nova Organic PCL |
| Food Moments PCL |
Nova Organic and Food Moments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Organic and Food Moments
The main advantage of trading using opposite Nova Organic and Food Moments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Organic position performs unexpectedly, Food Moments 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 Food Moments will offset losses from the drop in Food Moments' long position.| Nova Organic vs. Chamni Eye PCL | Nova Organic vs. Siam Global House | Nova Organic vs. The Erawan Group | Nova Organic vs. Ditto Public |
| Food Moments vs. Delta Electronics Public | Food Moments vs. Delta Electronics Public | Food Moments vs. Airports of Thailand | Food Moments vs. Airports of Thailand |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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