Correlation Between NORTHERN NIGERIA and VFD GROUP

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

By analyzing existing cross correlation between NORTHERN NIGERIA FLOUR and VFD GROUP, you can compare the effects of market volatilities on NORTHERN NIGERIA and VFD GROUP 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 NORTHERN NIGERIA with a short position of VFD GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHERN NIGERIA and VFD GROUP.

Diversification Opportunities for NORTHERN NIGERIA and VFD GROUP

-0.42

Correlation Coefficient

NORTHERN NIGERIA  VFD GROUP

Very good diversification

The 3 months correlation between NORTHERN and VFD is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding NORTHERN NIGERIA FLOUR and VFD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VFD GROUP and NORTHERN NIGERIA 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 NORTHERN NIGERIA FLOUR are associated (or correlated) with VFD GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VFD GROUP has no effect on the direction of NORTHERN NIGERIA i.e., NORTHERN NIGERIA and VFD GROUP go up and down completely randomly.

Pair Corralation between NORTHERN NIGERIA and VFD GROUP

Assuming the 90 days trading horizon NORTHERN NIGERIA FLOUR is expected to generate 1.89 times more return on investment than VFD GROUP. However, NORTHERN NIGERIA is 1.89 times more volatile than VFD GROUP. It trades about 0.44 of its potential returns per unit of risk. VFD GROUP is currently generating about -0.09 per unit of risk. If you would invest  7,500  in NORTHERN NIGERIA FLOUR on February 24, 2025 and sell it today you would earn a total of  4,370  from holding NORTHERN NIGERIA FLOUR or generate 58.27% return on investment over 90 days.

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

NORTHERN NIGERIA FLOUR  vs.  VFD GROUP

NORTHERN NIGERIA FLOUR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NORTHERN NIGERIA FLOUR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, NORTHERN NIGERIA displayed solid returns over the last few months and may actually be approaching a breakup point.

VFD GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days VFD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NORTHERN NIGERIA and VFD GROUP

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

The idea behind NORTHERN NIGERIA FLOUR and VFD GROUP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.