Correlation Between Vita Coco and NOHO

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

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

Diversification Opportunities for Vita Coco and NOHO

-0.28

Correlation Coefficient

Vita Coco  NOHO

Very good diversification

The 3 months correlation between Vita and NOHO is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and NOHO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOHO Inc and Vita Coco 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 Vita Coco are associated (or correlated) with NOHO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOHO Inc has no effect on the direction of Vita Coco i.e., Vita Coco and NOHO go up and down completely randomly.

Pair Corralation between Vita Coco and NOHO

Given the investment horizon of 90 days Vita Coco is expected to under-perform the NOHO. But the stock apears to be less risky and, when comparing its historical volatility, Vita Coco is 15.95 times less risky than NOHO. The stock trades about -0.06 of its potential returns per unit of risk. The NOHO Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.01  in NOHO Inc on December 27, 2024 and sell it today you would earn a total of  0.01  from holding NOHO Inc or generate 100.0% return on investment over 90 days.

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

Vita Coco  vs.  NOHO Inc

Vita Coco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vita Coco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

NOHO Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NOHO Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, NOHO disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vita Coco and NOHO

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

The idea behind Vita Coco and NOHO 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.