Correlation Between VITAFOAM NIGERIA and NORTHERN NIGERIA

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

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

Diversification Opportunities for VITAFOAM NIGERIA and NORTHERN NIGERIA

-0.23

Correlation Coefficient

VITAFOAM NIGERIA  NORTHERN NIGERIA

Very good diversification

The 3 months correlation between VITAFOAM and NORTHERN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding VITAFOAM NIGERIA PLC and NORTHERN NIGERIA FLOUR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN NIGERIA FLOUR and VITAFOAM 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 VITAFOAM NIGERIA PLC are associated (or correlated) with NORTHERN NIGERIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHERN NIGERIA FLOUR has no effect on the direction of VITAFOAM NIGERIA i.e., VITAFOAM NIGERIA and NORTHERN NIGERIA go up and down completely randomly.

Pair Corralation between VITAFOAM NIGERIA and NORTHERN NIGERIA

Assuming the 90 days trading horizon VITAFOAM NIGERIA PLC is expected to generate 1.11 times more return on investment than NORTHERN NIGERIA. However, VITAFOAM NIGERIA is 1.11 times more volatile than NORTHERN NIGERIA FLOUR. It trades about 0.06 of its potential returns per unit of risk. NORTHERN NIGERIA FLOUR is currently generating about -0.09 per unit of risk. If you would invest  7,400  in VITAFOAM NIGERIA PLC on July 3, 2025 and sell it today you would earn a total of  580.00  from holding VITAFOAM NIGERIA PLC or generate 7.84% return on investment over 90 days.

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

VITAFOAM NIGERIA PLC  vs.  NORTHERN NIGERIA FLOUR

VITAFOAM NIGERIA PLC

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in VITAFOAM NIGERIA PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, VITAFOAM NIGERIA may actually be approaching a critical reversion point that can send shares even higher in November 2025.

NORTHERN NIGERIA FLOUR

Risk-Adjusted Performance

Weakest

Over the last 90 days NORTHERN NIGERIA FLOUR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in November 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with VITAFOAM NIGERIA and NORTHERN NIGERIA

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

The idea behind VITAFOAM NIGERIA PLC and NORTHERN NIGERIA FLOUR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.