Correlation Between Quice Food and National Refinery

Can any of the company-specific risk be diversified away by investing in both Quice Food and National Refinery 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 Quice Food and National Refinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quice Food Industries and National Refinery, you can compare the effects of market volatilities on Quice Food and National Refinery 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 Quice Food with a short position of National Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quice Food and National Refinery.

Diversification Opportunities for Quice Food and National Refinery

-0.06

Correlation Coefficient

Quice Food  National Refinery

Good diversification

The 3 months correlation between Quice and National is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Quice Food Industries and National Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Refinery and Quice Food 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 Quice Food Industries are associated (or correlated) with National Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Refinery has no effect on the direction of Quice Food i.e., Quice Food and National Refinery go up and down completely randomly.

Pair Corralation between Quice Food and National Refinery

Assuming the 90 days trading horizon Quice Food Industries is expected to generate 0.9 times more return on investment than National Refinery. However, Quice Food Industries is 1.11 times less risky than National Refinery. It trades about 0.01 of its potential returns per unit of risk. National Refinery is currently generating about 0.0 per unit of risk. If you would invest  683.00  in Quice Food Industries on December 2, 2024 and sell it today you would lose (5.00) from holding Quice Food Industries or give up 0.73% of portfolio value over 90 days.

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

Quice Food Industries  vs.  National Refinery

Quice Food Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quice Food Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Quice Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

National Refinery

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Refinery has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, National Refinery is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Quice Food and National Refinery

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

The idea behind Quice Food Industries and National Refinery 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.