Correlation Between Associated British and Nichirei

Can any of the company-specific risk be diversified away by investing in both Associated British and Nichirei 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 Nichirei 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 Nichirei, you can compare the effects of market volatilities on Associated British and Nichirei 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 Nichirei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Nichirei.

Diversification Opportunities for Associated British and Nichirei

0.0

Correlation Coefficient

Associated British  Nichirei

Pay attention - limited upside

The 3 months correlation between Associated and Nichirei is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Nichirei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nichirei 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 Nichirei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nichirei has no effect on the direction of Associated British i.e., Associated British and Nichirei go up and down completely randomly.

Pair Corralation between Associated British and Nichirei

If you would invest  2,996  in Associated British Foods on January 31, 2024 and sell it today you would earn a total of  167.00  from holding Associated British Foods or generate 5.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Associated British Foods  vs.  Nichirei

Associated British Foods

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated British Foods are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Associated British may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Nichirei

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nichirei has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Nichirei is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Associated British and Nichirei

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

The idea behind Associated British Foods and Nichirei 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.