Correlation Between Nichirei and Blue Star

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

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

Diversification Opportunities for Nichirei and Blue Star

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Correlation Coefficient

Nichirei  Blue Star

Pay attention - limited upside

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

Pair Corralation between Nichirei and Blue Star

Assuming the 90 days horizon Nichirei is expected to generate 0.01 times more return on investment than Blue Star. However, Nichirei is 103.97 times less risky than Blue Star. It trades about 0.11 of its potential returns per unit of risk. Blue Star Foods is currently generating about -0.11 per unit of risk. If you would invest  1,196  in Nichirei on October 3, 2024 and sell it today you would earn a total of  14.00  from holding Nichirei or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.51%
Values	Daily Returns

Nichirei  vs.  Blue Star Foods

Nichirei

Risk-Adjusted Performance

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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.

Blue Star Foods

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Blue Star Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Nichirei and Blue Star

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

The idea behind Nichirei and Blue Star Foods 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.