Correlation Between CTS Eventim and NISSIN FOODS

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

By analyzing existing cross correlation between CTS Eventim AG and NISSIN FOODS HLDGS, you can compare the effects of market volatilities on CTS Eventim and NISSIN FOODS 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 CTS Eventim with a short position of NISSIN FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS Eventim and NISSIN FOODS.

Diversification Opportunities for CTS Eventim and NISSIN FOODS

0.09

Correlation Coefficient

CTS Eventim  NISSIN FOODS

Significant diversification

The 3 months correlation between CTS and NISSIN is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CTS Eventim AG and NISSIN FOODS HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSIN FOODS HLDGS and CTS Eventim 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 CTS Eventim AG are associated (or correlated) with NISSIN FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSIN FOODS HLDGS has no effect on the direction of CTS Eventim i.e., CTS Eventim and NISSIN FOODS go up and down completely randomly.

Pair Corralation between CTS Eventim and NISSIN FOODS

Assuming the 90 days horizon CTS Eventim AG is expected to under-perform the NISSIN FOODS. In addition to that, CTS Eventim is 1.2 times more volatile than NISSIN FOODS HLDGS. It trades about -0.01 of its total potential returns per unit of risk. NISSIN FOODS HLDGS is currently generating about 0.0 per unit of volatility. If you would invest  2,460  in NISSIN FOODS HLDGS on September 16, 2024 and sell it today you would lose (20.00) from holding NISSIN FOODS HLDGS or give up 0.81% of portfolio value over 90 days.

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

CTS Eventim AG  vs.  NISSIN FOODS HLDGS

CTS Eventim AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTS Eventim AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CTS Eventim is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NISSIN FOODS HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSIN FOODS HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, NISSIN FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CTS Eventim and NISSIN FOODS

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

The idea behind CTS Eventim AG and NISSIN FOODS HLDGS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.