Correlation Between Monde Nissin and Crown Asia

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

By analyzing existing cross correlation between Monde Nissin Corp and Crown Asia Chemicals, you can compare the effects of market volatilities on Monde Nissin and Crown Asia 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 Monde Nissin with a short position of Crown Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monde Nissin and Crown Asia.

Diversification Opportunities for Monde Nissin and Crown Asia

0.4

Correlation Coefficient

Monde Nissin  Crown Asia

Very weak diversification

The 3 months correlation between Monde and Crown is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Monde Nissin Corp and Crown Asia Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Asia Chemicals and Monde Nissin 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 Monde Nissin Corp are associated (or correlated) with Crown Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Asia Chemicals has no effect on the direction of Monde Nissin i.e., Monde Nissin and Crown Asia go up and down completely randomly.

Pair Corralation between Monde Nissin and Crown Asia

Assuming the 90 days trading horizon Monde Nissin Corp is expected to under-perform the Crown Asia. In addition to that, Monde Nissin is 1.47 times more volatile than Crown Asia Chemicals. It trades about -0.24 of its total potential returns per unit of risk. Crown Asia Chemicals is currently generating about -0.07 per unit of volatility. If you would invest  192.00  in Crown Asia Chemicals on October 24, 2024 and sell it today you would lose (17.00) from holding Crown Asia Chemicals or give up 8.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Monde Nissin Corp  vs.  Crown Asia Chemicals

Monde Nissin Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monde Nissin Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Crown Asia Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Asia Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Monde Nissin and Crown Asia

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

The idea behind Monde Nissin Corp and Crown Asia Chemicals 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.