Correlation Between Associated British and Kikkoman
Can any of the company-specific risk be diversified away by investing in both Associated British and Kikkoman 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 Associated British and Kikkoman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Kikkoman, you can compare the effects of market volatilities on Associated British and Kikkoman 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 Associated British with a short position of Kikkoman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Kikkoman.
Diversification Opportunities for Associated British and Kikkoman
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Associated and Kikkoman is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Kikkoman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kikkoman and Associated British 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 Associated British Foods are associated (or correlated) with Kikkoman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kikkoman has no effect on the direction of Associated British i.e., Associated British and Kikkoman go up and down completely randomly.
Pair Corralation between Associated British and Kikkoman
Assuming the 90 days horizon Associated British Foods is expected to generate 0.7 times more return on investment than Kikkoman. However, Associated British Foods is 1.43 times less risky than Kikkoman. It trades about -0.05 of its potential returns per unit of risk. Kikkoman is currently generating about -0.06 per unit of risk. If you would invest 3,094 in Associated British Foods on January 24, 2024 and sell it today you would lose (50.00) from holding Associated British Foods or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Kikkoman
Performance |
| Timeline |
| Associated British Foods |
| Kikkoman |
Associated British and Kikkoman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Kikkoman
The main advantage of trading using opposite Associated British and Kikkoman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Kikkoman 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 Kikkoman will offset losses from the drop in Kikkoman's long position.| Associated British vs. Kellanova | Associated British vs. Lancaster Colony | Associated British vs. The A2 Milk | Associated British vs. Artisan Consumer Goods |
| Kikkoman vs. Kellanova | Kikkoman vs. Lancaster Colony | Kikkoman vs. The A2 Milk | Kikkoman vs. Artisan Consumer Goods |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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