Correlation Between NSL Foods and CHUWIT FARM

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

By analyzing existing cross correlation between NSL Foods Public and CHUWIT FARM PUBLIC, you can compare the effects of market volatilities on NSL Foods and CHUWIT FARM 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 NSL Foods with a short position of CHUWIT FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of NSL Foods and CHUWIT FARM.

Diversification Opportunities for NSL Foods and CHUWIT FARM

0.46

Correlation Coefficient

NSL Foods  CHUWIT FARM

Very weak diversification

The 3 months correlation between NSL and CHUWIT is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NSL Foods Public and CHUWIT FARM PUBLIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHUWIT FARM PUBLIC and NSL 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 NSL Foods Public are associated (or correlated) with CHUWIT FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHUWIT FARM PUBLIC has no effect on the direction of NSL Foods i.e., NSL Foods and CHUWIT FARM go up and down completely randomly.

Pair Corralation between NSL Foods and CHUWIT FARM

Assuming the 90 days trading horizon NSL Foods Public is expected to generate 0.89 times more return on investment than CHUWIT FARM. However, NSL Foods Public is 1.12 times less risky than CHUWIT FARM. It trades about -0.11 of its potential returns per unit of risk. CHUWIT FARM PUBLIC is currently generating about -0.27 per unit of risk. If you would invest  3,300  in NSL Foods Public on October 27, 2024 and sell it today you would lose (500.00) from holding NSL Foods Public or give up 15.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

NSL Foods Public  vs.  CHUWIT FARM PUBLIC

NSL Foods Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSL Foods Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CHUWIT FARM PUBLIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHUWIT FARM PUBLIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NSL Foods and CHUWIT FARM

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

The idea behind NSL Foods Public and CHUWIT FARM PUBLIC 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.