Correlation Between Nissin Foods and Federal Home

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

By analyzing existing cross correlation between Nissin Foods Holdings and Federal Home Loan, you can compare the effects of market volatilities on Nissin Foods and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissin Foods and Federal Home.

Diversification Opportunities for Nissin Foods and Federal Home

-0.68

Correlation Coefficient

Nissin Foods  Federal Home

Excellent diversification

The 3 months correlation between Nissin and Federal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nissin Foods Holdings and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Holdings are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Nissin Foods i.e., Nissin Foods and Federal Home go up and down completely randomly.

Pair Corralation between Nissin Foods and Federal Home

If you would invest  843.00  in Federal Home Loan on October 9, 2024 and sell it today you would earn a total of  133.00  from holding Federal Home Loan or generate 15.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.26%
Values	Daily Returns

Nissin Foods Holdings  vs.  Federal Home Loan

Nissin Foods Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nissin Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Nissin Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Federal Home Loan

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Home Loan are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Federal Home displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nissin Foods and Federal Home

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

The idea behind Nissin Foods Holdings and Federal Home Loan 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 Stocks Directory module to find actively traded stocks across global markets.