Correlation Between HUD1 Investment and Nafoods Group

Can any of the company-specific risk be diversified away by investing in both HUD1 Investment 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 HUD1 Investment and Nafoods Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUD1 Investment and and Nafoods Group JSC, you can compare the effects of market volatilities on HUD1 Investment 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 HUD1 Investment with a short position of Nafoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUD1 Investment and Nafoods Group.

Diversification Opportunities for HUD1 Investment and Nafoods Group

0.25

Correlation Coefficient

HUD1 Investment  Nafoods Group

Modest diversification

The 3 months correlation between HUD1 and Nafoods is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding HUD1 Investment and 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 HUD1 Investment 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 HUD1 Investment and 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 HUD1 Investment i.e., HUD1 Investment and Nafoods Group go up and down completely randomly.

Pair Corralation between HUD1 Investment and Nafoods Group

Assuming the 90 days trading horizon HUD1 Investment is expected to generate 1.58 times less return on investment than Nafoods Group. In addition to that, HUD1 Investment is 2.4 times more volatile than Nafoods Group JSC. It trades about 0.02 of its total potential returns per unit of risk. Nafoods Group JSC is currently generating about 0.06 per unit of volatility. If you would invest  1,850,000  in Nafoods Group JSC on September 15, 2024 and sell it today you would earn a total of  120,000  from holding Nafoods Group JSC or generate 6.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	61.54%
Values	Daily Returns

HUD1 Investment and  vs.  Nafoods Group JSC

HUD1 Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUD1 Investment and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, HUD1 Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nafoods Group JSC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nafoods Group JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Nafoods Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HUD1 Investment and Nafoods Group

The main advantage of trading using opposite HUD1 Investment and Nafoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUD1 Investment 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 HUD1 Investment and 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.