Correlation Between NIPPON MEAT and OPEN HOUSE

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

By analyzing existing cross correlation between NIPPON MEAT PACKERS and OPEN HOUSE GROUP, you can compare the effects of market volatilities on NIPPON MEAT and OPEN HOUSE 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 NIPPON MEAT with a short position of OPEN HOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON MEAT and OPEN HOUSE.

Diversification Opportunities for NIPPON MEAT and OPEN HOUSE

0.51

Correlation Coefficient

NIPPON MEAT  OPEN HOUSE

Very weak diversification

The 3 months correlation between NIPPON and OPEN is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON MEAT PACKERS and OPEN HOUSE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPEN HOUSE GROUP and NIPPON MEAT 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 NIPPON MEAT PACKERS are associated (or correlated) with OPEN HOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPEN HOUSE GROUP has no effect on the direction of NIPPON MEAT i.e., NIPPON MEAT and OPEN HOUSE go up and down completely randomly.

Pair Corralation between NIPPON MEAT and OPEN HOUSE

Assuming the 90 days trading horizon NIPPON MEAT PACKERS is expected to under-perform the OPEN HOUSE. In addition to that, NIPPON MEAT is 1.46 times more volatile than OPEN HOUSE GROUP. It trades about -0.13 of its total potential returns per unit of risk. OPEN HOUSE GROUP is currently generating about 0.23 per unit of volatility. If you would invest  3,140  in OPEN HOUSE GROUP on November 29, 2024 and sell it today you would earn a total of  300.00  from holding OPEN HOUSE GROUP or generate 9.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

NIPPON MEAT PACKERS  vs.  OPEN HOUSE GROUP

NIPPON MEAT PACKERS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NIPPON MEAT PACKERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

OPEN HOUSE GROUP

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NIPPON MEAT and OPEN HOUSE

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

The idea behind NIPPON MEAT PACKERS and OPEN HOUSE GROUP 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.