Correlation Between Post and Nafoods Group
Can any of the company-specific risk be diversified away by investing in both Post and Nafoods Group 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 Post and Nafoods Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Post and Telecommunications and Nafoods Group JSC, you can compare the effects of market volatilities on Post and Nafoods Group 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 Post with a short position of Nafoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post and Nafoods Group.
Diversification Opportunities for Post and Nafoods Group
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Post and Nafoods is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Post and Telecommunications and Nafoods Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafoods Group JSC and Post 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 Post and Telecommunications are associated (or correlated) with Nafoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafoods Group JSC has no effect on the direction of Post i.e., Post and Nafoods Group go up and down completely randomly.
Pair Corralation between Post and Nafoods Group
Assuming the 90 days trading horizon Post and Telecommunications is expected to generate 1.28 times more return on investment than Nafoods Group. However, Post is 1.28 times more volatile than Nafoods Group JSC. It trades about 0.01 of its potential returns per unit of risk. Nafoods Group JSC is currently generating about -0.13 per unit of risk. If you would invest 467,000 in Post and Telecommunications on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Post and Telecommunications or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Post and Telecommunications vs. Nafoods Group JSC
Performance |
| Timeline |
| Post and Telecommuni |
| Nafoods Group JSC |
Post and Nafoods Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Post and Nafoods Group
The main advantage of trading using opposite Post and Nafoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post position performs unexpectedly, Nafoods Group 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 Nafoods Group will offset losses from the drop in Nafoods Group's long position.The idea behind Post and Telecommunications and Nafoods Group JSC 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.| Nafoods Group vs. Dong A Hotel | Nafoods Group vs. Riverway Management JSC | Nafoods Group vs. Danang Education Investment | Nafoods Group vs. Global Electrical Technology |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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