Correlation Between NISSIN FOODS and Nomad Foods

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

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

Diversification Opportunities for NISSIN FOODS and Nomad Foods

-0.81

Correlation Coefficient

NISSIN FOODS  Nomad Foods

Pay attention - limited upside

The 3 months correlation between NISSIN and Nomad is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding NISSIN FOODS HLDGS and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and NISSIN FOODS 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 NISSIN FOODS HLDGS are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of NISSIN FOODS i.e., NISSIN FOODS and Nomad Foods go up and down completely randomly.

Pair Corralation between NISSIN FOODS and Nomad Foods

Assuming the 90 days trading horizon NISSIN FOODS HLDGS is expected to under-perform the Nomad Foods. But the stock apears to be less risky and, when comparing its historical volatility, NISSIN FOODS HLDGS is 1.35 times less risky than Nomad Foods. The stock trades about -0.19 of its potential returns per unit of risk. The Nomad Foods is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,525  in Nomad Foods on December 30, 2024 and sell it today you would earn a total of  275.00  from holding Nomad Foods or generate 18.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NISSIN FOODS HLDGS  vs.  Nomad Foods

NISSIN FOODS HLDGS

Risk-Adjusted Performance

Very Weak

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

Nomad Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nomad Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Nomad Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISSIN FOODS and Nomad Foods

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

The idea behind NISSIN FOODS HLDGS and Nomad 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.