Correlation Between Kikkoman and NH Foods
Can any of the company-specific risk be diversified away by investing in both Kikkoman and NH 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 Kikkoman and NH Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kikkoman and NH Foods Ltd, you can compare the effects of market volatilities on Kikkoman and NH 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 Kikkoman with a short position of NH Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kikkoman and NH Foods.
Diversification Opportunities for Kikkoman and NH Foods
Good diversification
The 3 months correlation between Kikkoman and NIPMY is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kikkoman and NH Foods Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Foods and Kikkoman 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 Kikkoman are associated (or correlated) with NH Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Foods has no effect on the direction of Kikkoman i.e., Kikkoman and NH Foods go up and down completely randomly.
Pair Corralation between Kikkoman and NH Foods
Assuming the 90 days horizon Kikkoman is expected to under-perform the NH Foods. In addition to that, Kikkoman is 1.2 times more volatile than NH Foods Ltd. It trades about -0.06 of its total potential returns per unit of risk. NH Foods Ltd is currently generating about 0.22 per unit of volatility. If you would invest 1,510 in NH Foods Ltd on January 27, 2024 and sell it today you would earn a total of 115.00 from holding NH Foods Ltd or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kikkoman vs. NH Foods Ltd
Performance |
| Timeline |
| Kikkoman |
| NH Foods |
Kikkoman and NH Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kikkoman and NH Foods
The main advantage of trading using opposite Kikkoman and NH Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kikkoman position performs unexpectedly, NH 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 NH Foods will offset losses from the drop in NH Foods' long position.| Kikkoman vs. Kellanova | Kikkoman vs. Lancaster Colony | Kikkoman vs. The A2 Milk | Kikkoman vs. Artisan Consumer Goods |
| NH Foods vs. Kellanova | NH Foods vs. Lancaster Colony | NH Foods vs. The A2 Milk | NH Foods 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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