Correlation Between Standard Foods and CHC Healthcare
Can any of the company-specific risk be diversified away by investing in both Standard Foods and CHC Healthcare 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 Standard Foods and CHC Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and CHC Healthcare Group, you can compare the effects of market volatilities on Standard Foods and CHC Healthcare 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 Standard Foods with a short position of CHC Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and CHC Healthcare.
Diversification Opportunities for Standard Foods and CHC Healthcare
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Standard and CHC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and CHC Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Healthcare Group and Standard 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 Standard Foods Corp are associated (or correlated) with CHC Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Healthcare Group has no effect on the direction of Standard Foods i.e., Standard Foods and CHC Healthcare go up and down completely randomly.
Pair Corralation between Standard Foods and CHC Healthcare
Assuming the 90 days trading horizon Standard Foods Corp is expected to generate 0.48 times more return on investment than CHC Healthcare. However, Standard Foods Corp is 2.1 times less risky than CHC Healthcare. It trades about -0.02 of its potential returns per unit of risk. CHC Healthcare Group is currently generating about -0.05 per unit of risk. If you would invest 4,105 in Standard Foods Corp on September 2, 2024 and sell it today you would lose (350.00) from holding Standard Foods Corp or give up 8.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. CHC Healthcare Group
Performance |
| Timeline |
| Standard Foods Corp |
| CHC Healthcare Group |
Standard Foods and CHC Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and CHC Healthcare
The main advantage of trading using opposite Standard Foods and CHC Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, CHC Healthcare 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 CHC Healthcare will offset losses from the drop in CHC Healthcare's long position.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
| CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
Check out your portfolio center.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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