Correlation Between Nafoods Group and Innovative Technology
Can any of the company-specific risk be diversified away by investing in both Nafoods Group and Innovative Technology 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 Nafoods Group and Innovative Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nafoods Group JSC and Innovative Technology Development, you can compare the effects of market volatilities on Nafoods Group and Innovative Technology 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 Nafoods Group with a short position of Innovative Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nafoods Group and Innovative Technology.
Diversification Opportunities for Nafoods Group and Innovative Technology
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nafoods and Innovative is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nafoods Group JSC and Innovative Technology Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Technology and Nafoods Group 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 Nafoods Group JSC are associated (or correlated) with Innovative Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Technology has no effect on the direction of Nafoods Group i.e., Nafoods Group and Innovative Technology go up and down completely randomly.
Pair Corralation between Nafoods Group and Innovative Technology
Assuming the 90 days trading horizon Nafoods Group JSC is expected to generate 0.93 times more return on investment than Innovative Technology. However, Nafoods Group JSC is 1.08 times less risky than Innovative Technology. It trades about 0.09 of its potential returns per unit of risk. Innovative Technology Development is currently generating about 0.03 per unit of risk. If you would invest 863,636 in Nafoods Group JSC on September 20, 2024 and sell it today you would earn a total of 1,106,364 from holding Nafoods Group JSC or generate 128.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nafoods Group JSC vs. Innovative Technology Developm
Performance |
Timeline |
Nafoods Group JSC |
Innovative Technology |
Nafoods Group and Innovative Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nafoods Group and Innovative Technology
The main advantage of trading using opposite Nafoods Group and Innovative Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nafoods Group position performs unexpectedly, Innovative Technology 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 Innovative Technology will offset losses from the drop in Innovative Technology's long position.Nafoods Group vs. Fecon Mining JSC | Nafoods Group vs. Tienlen Steel Corp | Nafoods Group vs. Taseco Air Services | Nafoods Group vs. Danang Education Investment |
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Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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