Correlation Between Nickel Asia and Jollibee Foods

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

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

Diversification Opportunities for Nickel Asia and Jollibee Foods

0.1

Correlation Coefficient

Nickel Asia  Jollibee Foods

Average diversification

The 3 months correlation between Nickel and Jollibee is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Asia Corp and Jollibee Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods Corp and Nickel Asia 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 Nickel Asia Corp are associated (or correlated) with Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods Corp has no effect on the direction of Nickel Asia i.e., Nickel Asia and Jollibee Foods go up and down completely randomly.

Pair Corralation between Nickel Asia and Jollibee Foods

Assuming the 90 days trading horizon Nickel Asia Corp is expected to generate 1.19 times more return on investment than Jollibee Foods. However, Nickel Asia is 1.19 times more volatile than Jollibee Foods Corp. It trades about -0.03 of its potential returns per unit of risk. Jollibee Foods Corp is currently generating about -0.06 per unit of risk. If you would invest  330.00  in Nickel Asia Corp on October 24, 2024 and sell it today you would lose (17.00) from holding Nickel Asia Corp or give up 5.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Nickel Asia Corp  vs.  Jollibee Foods Corp

Nickel Asia Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nickel Asia Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nickel Asia is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Jollibee Foods Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nickel Asia and Jollibee Foods

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

The idea behind Nickel Asia Corp and Jollibee Foods Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.