Correlation Between Kellanova and Meiji Holdings

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

By analyzing existing cross correlation between Kellanova and Meiji Holdings Co, you can compare the effects of market volatilities on Kellanova and Meiji Holdings 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 Kellanova with a short position of Meiji Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and Meiji Holdings.

Diversification Opportunities for Kellanova and Meiji Holdings

-0.31

Correlation Coefficient

Kellanova  Meiji Holdings

Very good diversification

The 3 months correlation between Kellanova and Meiji is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Meiji Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiji Holdings and Kellanova 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 Kellanova are associated (or correlated) with Meiji Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiji Holdings has no effect on the direction of Kellanova i.e., Kellanova and Meiji Holdings go up and down completely randomly.

Pair Corralation between Kellanova and Meiji Holdings

Taking into account the 90-day investment horizon Kellanova is expected to under-perform the Meiji Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Kellanova is 2.04 times less risky than Meiji Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Meiji Holdings Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,113  in Meiji Holdings Co on February 1, 2024 and sell it today you would earn a total of  0.00  from holding Meiji Holdings Co or generate 0.0% return on investment over 90 days.

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

Kellanova  vs.  Meiji Holdings Co

Kellanova

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kellanova is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Meiji Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meiji Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kellanova and Meiji Holdings

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

The idea behind Kellanova and Meiji Holdings Co 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.