Correlation Between Nissin Foods and Public Service

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

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

Diversification Opportunities for Nissin Foods and Public Service

-0.59

Correlation Coefficient

Nissin Foods  Public Service

Excellent diversification

The 3 months correlation between Nissin and Public is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nissin Foods Holdings and Public Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service and Nissin 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 Nissin Foods Holdings are associated (or correlated) with Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service has no effect on the direction of Nissin Foods i.e., Nissin Foods and Public Service go up and down completely randomly.

Pair Corralation between Nissin Foods and Public Service

If you would invest  2,724  in Nissin Foods Holdings on April 4, 2024 and sell it today you would earn a total of  0.00  from holding Nissin Foods Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Nissin Foods Holdings  vs.  Public Service

Nissin Foods Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nissin Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in August 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Public Service

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Public Service are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Public Service is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nissin Foods and Public Service

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

The idea behind Nissin Foods Holdings and Public Service 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.