Correlation Between SENECA FOODS and NISSHA

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

By analyzing existing cross correlation between SENECA FOODS A and NISSHA LTD, you can compare the effects of market volatilities on SENECA FOODS and NISSHA 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 SENECA FOODS with a short position of NISSHA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and NISSHA.

Diversification Opportunities for SENECA FOODS and NISSHA

-0.85

Correlation Coefficient

SENECA FOODS  NISSHA

Pay attention - limited upside

The 3 months correlation between SENECA and NISSHA is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and NISSHA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSHA LTD and SENECA 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 SENECA FOODS A are associated (or correlated) with NISSHA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSHA LTD has no effect on the direction of SENECA FOODS i.e., SENECA FOODS and NISSHA go up and down completely randomly.

Pair Corralation between SENECA FOODS and NISSHA

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.49 times more return on investment than NISSHA. However, SENECA FOODS is 1.49 times more volatile than NISSHA LTD. It trades about 0.15 of its potential returns per unit of risk. NISSHA LTD is currently generating about -0.18 per unit of risk. If you would invest  5,350  in SENECA FOODS A on September 14, 2024 and sell it today you would earn a total of  1,450  from holding SENECA FOODS A or generate 27.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

SENECA FOODS A  vs.  NISSHA LTD

SENECA FOODS A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SENECA FOODS exhibited solid returns over the last few months and may actually be approaching a breakup point.

NISSHA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSHA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SENECA FOODS and NISSHA

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

The idea behind SENECA FOODS A and NISSHA LTD 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.