Correlation Between Monde Nissin and National Reinsurance

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

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

Diversification Opportunities for Monde Nissin and National Reinsurance

0.75

Correlation Coefficient

Monde Nissin  National Reinsurance

Poor diversification

The 3 months correlation between Monde and National is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Monde Nissin Corp and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Monde Nissin 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 Monde Nissin Corp are associated (or correlated) with National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of Monde Nissin i.e., Monde Nissin and National Reinsurance go up and down completely randomly.

Pair Corralation between Monde Nissin and National Reinsurance

Assuming the 90 days trading horizon Monde Nissin is expected to generate 8.46 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Monde Nissin Corp is 3.27 times less risky than National Reinsurance. It trades about 0.03 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  40.00  in National Reinsurance on September 14, 2024 and sell it today you would earn a total of  30.00  from holding National Reinsurance or generate 75.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	73.38%
Values	Daily Returns

Monde Nissin Corp  vs.  National Reinsurance

Monde Nissin Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monde Nissin Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

National Reinsurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Monde Nissin and National Reinsurance

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

The idea behind Monde Nissin Corp and National Reinsurance 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.