Correlation Between Lancaster Colony and Nichirei

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

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

Diversification Opportunities for Lancaster Colony and Nichirei

0.0

Correlation Coefficient

Lancaster Colony  Nichirei

Pay attention - limited upside

The 3 months correlation between Lancaster and Nichirei is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Nichirei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nichirei and Lancaster Colony 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 Lancaster Colony are associated (or correlated) with Nichirei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nichirei has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Nichirei go up and down completely randomly.

Pair Corralation between Lancaster Colony and Nichirei

If you would invest  1,210  in Nichirei on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Nichirei or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Lancaster Colony  vs.  Nichirei

Lancaster Colony

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Lancaster Colony has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lancaster Colony is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nichirei

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nichirei has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Nichirei is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lancaster Colony and Nichirei

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

The idea behind Lancaster Colony and Nichirei 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.