Correlation Between Borealis Foods and Nocera

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

By analyzing existing cross correlation between Borealis Foods and Nocera Inc, you can compare the effects of market volatilities on Borealis Foods and Nocera 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 Borealis Foods with a short position of Nocera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borealis Foods and Nocera.

Diversification Opportunities for Borealis Foods and Nocera

-0.42

Correlation Coefficient

Borealis Foods  Nocera

Very good diversification

The 3 months correlation between Borealis and Nocera is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Borealis Foods and Nocera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nocera Inc and Borealis 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 Borealis Foods are associated (or correlated) with Nocera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nocera Inc has no effect on the direction of Borealis Foods i.e., Borealis Foods and Nocera go up and down completely randomly.

Pair Corralation between Borealis Foods and Nocera

Assuming the 90 days horizon Borealis Foods is expected to generate 1.71 times more return on investment than Nocera. However, Borealis Foods is 1.71 times more volatile than Nocera Inc. It trades about 0.05 of its potential returns per unit of risk. Nocera Inc is currently generating about 0.01 per unit of risk. If you would invest  7.11  in Borealis Foods on October 3, 2024 and sell it today you would lose (0.11) from holding Borealis Foods or give up 1.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.78%
Values	Daily Returns

Borealis Foods  vs.  Nocera Inc

Borealis Foods

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Borealis Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Borealis Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Nocera Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nocera Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nocera is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Borealis Foods and Nocera

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

The idea behind Borealis Foods and Nocera Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.