Correlation Between STI Education and Monde Nissin

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

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

Diversification Opportunities for STI Education and Monde Nissin

-0.42

Correlation Coefficient

STI Education  Monde Nissin

Very good diversification

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

Pair Corralation between STI Education and Monde Nissin

Assuming the 90 days trading horizon STI Education Systems is expected to generate 0.54 times more return on investment than Monde Nissin. However, STI Education Systems is 1.85 times less risky than Monde Nissin. It trades about 0.08 of its potential returns per unit of risk. Monde Nissin Corp is currently generating about -0.14 per unit of risk. If you would invest  126.00  in STI Education Systems on September 25, 2024 and sell it today you would earn a total of  4.00  from holding STI Education Systems or generate 3.17% return on investment over 90 days.

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

STI Education Systems  vs.  Monde Nissin Corp

STI Education Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STI Education Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, STI Education exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady 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.

Pair Trading with STI Education and Monde Nissin

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

The idea behind STI Education Systems and Monde Nissin Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.