Correlation Between NH Foods and Kikkoman
Can any of the company-specific risk be diversified away by investing in both NH Foods 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 NH Foods and Kikkoman 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 Kikkoman, you can compare the effects of market volatilities on NH Foods 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 NH Foods with a short position of Kikkoman. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and Kikkoman.
Diversification Opportunities for NH Foods and Kikkoman
Good diversification
The 3 months correlation between NIPMY and Kikkoman is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and Kikkoman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kikkoman 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 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 NH Foods i.e., NH Foods and Kikkoman go up and down completely randomly.
Pair Corralation between NH Foods and Kikkoman
Assuming the 90 days horizon NH Foods Ltd is expected to generate 0.01 times more return on investment than Kikkoman. However, NH Foods Ltd is 101.8 times less risky than Kikkoman. It trades about 0.09 of its potential returns per unit of risk. Kikkoman is currently generating about -0.03 per unit of risk. If you would invest 1,510 in NH Foods Ltd on January 20, 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 |
NH Foods Ltd vs. Kikkoman
Performance |
| Timeline |
| NH Foods |
| Kikkoman |
NH Foods and Kikkoman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and Kikkoman
The main advantage of trading using opposite NH Foods and Kikkoman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods 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.| NH Foods vs. Kellanova | NH Foods vs. Lancaster Colony | NH Foods vs. The A2 Milk | NH Foods 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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