Correlation Between Ashtead Group and NISSIN FOODS

Can any of the company-specific risk be diversified away by investing in both Ashtead Group and NISSIN FOODS 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 Ashtead Group and NISSIN FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ashtead Group plc and NISSIN FOODS HLDGS, you can compare the effects of market volatilities on Ashtead Group and NISSIN FOODS 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 Ashtead Group with a short position of NISSIN FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and NISSIN FOODS.

Diversification Opportunities for Ashtead Group and NISSIN FOODS

0.44

Correlation Coefficient

Ashtead Group  NISSIN FOODS

Very weak diversification

The 3 months correlation between Ashtead and NISSIN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and NISSIN FOODS HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSIN FOODS HLDGS and Ashtead Group 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 Ashtead Group plc are associated (or correlated) with NISSIN FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSIN FOODS HLDGS has no effect on the direction of Ashtead Group i.e., Ashtead Group and NISSIN FOODS go up and down completely randomly.

Pair Corralation between Ashtead Group and NISSIN FOODS

Assuming the 90 days horizon Ashtead Group plc is expected to generate 1.48 times more return on investment than NISSIN FOODS. However, Ashtead Group is 1.48 times more volatile than NISSIN FOODS HLDGS. It trades about -0.08 of its potential returns per unit of risk. NISSIN FOODS HLDGS is currently generating about -0.19 per unit of risk. If you would invest  5,866  in Ashtead Group plc on December 29, 2024 and sell it today you would lose (666.00) from holding Ashtead Group plc or give up 11.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ashtead Group plc  vs.  NISSIN FOODS HLDGS

Ashtead Group plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashtead Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NISSIN FOODS HLDGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NISSIN FOODS HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ashtead Group and NISSIN FOODS

The main advantage of trading using opposite Ashtead Group and NISSIN FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Group position performs unexpectedly, NISSIN FOODS 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 NISSIN FOODS will offset losses from the drop in NISSIN FOODS's long position.

The idea behind Ashtead Group plc and NISSIN FOODS HLDGS 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.