Correlation Between Noble Financials and Mlk Foods

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

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

Diversification Opportunities for Noble Financials and Mlk Foods

0.2

Correlation Coefficient

Noble Financials  Mlk Foods

Modest diversification

The 3 months correlation between Noble and Mlk is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Noble Financials SA and Mlk Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mlk Foods Public and Noble Financials 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 Noble Financials SA are associated (or correlated) with Mlk Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mlk Foods Public has no effect on the direction of Noble Financials i.e., Noble Financials and Mlk Foods go up and down completely randomly.

Pair Corralation between Noble Financials and Mlk Foods

Assuming the 90 days trading horizon Noble Financials SA is expected to under-perform the Mlk Foods. But the stock apears to be less risky and, when comparing its historical volatility, Noble Financials SA is 1.16 times less risky than Mlk Foods. The stock trades about -0.02 of its potential returns per unit of risk. The Mlk Foods Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Mlk Foods Public on September 5, 2024 and sell it today you would earn a total of  5.00  from holding Mlk Foods Public or generate 4.72% return on investment over 90 days.

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

Noble Financials SA  vs.  Mlk Foods Public

Noble Financials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble Financials SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Noble Financials is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Mlk Foods Public

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mlk Foods Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Mlk Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Noble Financials and Mlk Foods

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

The idea behind Noble Financials SA and Mlk Foods Public 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.