Correlation Between NH Foods and Old Republic

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Can any of the company-specific risk be diversified away by investing in both NH Foods and Old Republic 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 NH Foods and Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Foods Ltd and Old Republic International, you can compare the effects of market volatilities on NH Foods and Old Republic 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 NH Foods with a short position of Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and Old Republic.

Diversification Opportunities for NH Foods and Old Republic

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between NIPMY and Old is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna and NH 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 NH Foods Ltd are associated (or correlated) with Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of NH Foods i.e., NH Foods and Old Republic go up and down completely randomly.

Pair Corralation between NH Foods and Old Republic

Assuming the 90 days horizon NH Foods is expected to generate 2.29 times less return on investment than Old Republic. But when comparing it to its historical volatility, NH Foods Ltd is 2.09 times less risky than Old Republic. It trades about 0.09 of its potential returns per unit of risk. Old Republic International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,212  in Old Republic International on September 6, 2024 and sell it today you would earn a total of  1,608  from holding Old Republic International or generate 72.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

NH Foods Ltd  vs.  Old Republic International

 Performance 
       Timeline  
NH Foods 

Risk-Adjusted Performance

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Over the last 90 days NH Foods Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, NH Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Old Republic Interna 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Old Republic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NH Foods and Old Republic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NH Foods and Old Republic

The main advantage of trading using opposite NH Foods and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.
The idea behind NH Foods Ltd and Old Republic International 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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