Correlation Between SFS REAL and NORTHERN NIGERIA

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Can any of the company-specific risk be diversified away by investing in both SFS REAL and NORTHERN NIGERIA 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 SFS REAL and NORTHERN NIGERIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFS REAL ESTATE and NORTHERN NIGERIA FLOUR, you can compare the effects of market volatilities on SFS REAL and NORTHERN NIGERIA 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 SFS REAL with a short position of NORTHERN NIGERIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFS REAL and NORTHERN NIGERIA.

Diversification Opportunities for SFS REAL and NORTHERN NIGERIA

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SFS and NORTHERN is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SFS REAL ESTATE and NORTHERN NIGERIA FLOUR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN NIGERIA FLOUR and SFS REAL 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 SFS REAL ESTATE are associated (or correlated) with NORTHERN NIGERIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHERN NIGERIA FLOUR has no effect on the direction of SFS REAL i.e., SFS REAL and NORTHERN NIGERIA go up and down completely randomly.

Pair Corralation between SFS REAL and NORTHERN NIGERIA

Assuming the 90 days trading horizon SFS REAL ESTATE is expected to generate 1.74 times more return on investment than NORTHERN NIGERIA. However, SFS REAL is 1.74 times more volatile than NORTHERN NIGERIA FLOUR. It trades about 0.25 of its potential returns per unit of risk. NORTHERN NIGERIA FLOUR is currently generating about -0.12 per unit of risk. If you would invest  30,155  in SFS REAL ESTATE on September 23, 2025 and sell it today you would earn a total of  11,720  from holding SFS REAL ESTATE or generate 38.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SFS REAL ESTATE  vs.  NORTHERN NIGERIA FLOUR

 Performance 
       Timeline  
SFS REAL ESTATE 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SFS REAL ESTATE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, SFS REAL unveiled solid returns over the last few months and may actually be approaching a breakup point.
NORTHERN NIGERIA FLOUR 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days NORTHERN NIGERIA FLOUR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

SFS REAL and NORTHERN NIGERIA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SFS REAL and NORTHERN NIGERIA

The main advantage of trading using opposite SFS REAL and NORTHERN NIGERIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFS REAL position performs unexpectedly, NORTHERN NIGERIA 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 NORTHERN NIGERIA will offset losses from the drop in NORTHERN NIGERIA's long position.
The idea behind SFS REAL ESTATE and NORTHERN NIGERIA FLOUR 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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