Correlation Between Nissin Foods and Supernus Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Nissin Foods and Supernus Pharmaceuticals 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 Supernus Pharmaceuticals 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 Supernus Pharmaceuticals, you can compare the effects of market volatilities on Nissin Foods and Supernus Pharmaceuticals 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 Supernus Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissin Foods and Supernus Pharmaceuticals.

Diversification Opportunities for Nissin Foods and Supernus Pharmaceuticals

-0.82

Correlation Coefficient

Nissin Foods  Supernus Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Nissin and Supernus is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nissin Foods Holdings and Supernus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernus Pharmaceuticals 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 Supernus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernus Pharmaceuticals has no effect on the direction of Nissin Foods i.e., Nissin Foods and Supernus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Nissin Foods and Supernus Pharmaceuticals

If you would invest  3,387  in Supernus Pharmaceuticals on October 23, 2024 and sell it today you would earn a total of  387.00  from holding Supernus Pharmaceuticals or generate 11.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.67%
Values	Daily Returns

Nissin Foods Holdings  vs.  Supernus Pharmaceuticals

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.

Supernus Pharmaceuticals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Supernus Pharmaceuticals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Supernus Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nissin Foods and Supernus Pharmaceuticals

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

The idea behind Nissin Foods Holdings and Supernus Pharmaceuticals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.