Correlation Between HF FOODS and BASF SE
Can any of the company-specific risk be diversified away by investing in both HF FOODS and BASF SE 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 HF FOODS and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HF FOODS GRP and BASF SE, you can compare the effects of market volatilities on HF FOODS and BASF SE 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 HF FOODS with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF FOODS and BASF SE.
Diversification Opportunities for HF FOODS and BASF SE
Very good diversification
The 3 months correlation between 3GX and BASF is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding HF FOODS GRP and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE and HF 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 HF FOODS GRP are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of HF FOODS i.e., HF FOODS and BASF SE go up and down completely randomly.
Pair Corralation between HF FOODS and BASF SE
Assuming the 90 days horizon HF FOODS GRP is expected to generate 1.15 times more return on investment than BASF SE. However, HF FOODS is 1.15 times more volatile than BASF SE. It trades about 0.29 of its potential returns per unit of risk. BASF SE is currently generating about -0.13 per unit of risk. If you would invest 298.00 in HF FOODS GRP on September 3, 2024 and sell it today you would earn a total of 42.00 from holding HF FOODS GRP or generate 14.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HF FOODS GRP vs. BASF SE
Performance |
| Timeline |
| HF FOODS GRP |
| BASF SE |
HF FOODS and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HF FOODS and BASF SE
The main advantage of trading using opposite HF FOODS and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF FOODS position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| HF FOODS vs. SHIP HEALTHCARE HLDGINC | HF FOODS vs. EEDUCATION ALBERT AB | HF FOODS vs. DEVRY EDUCATION GRP | HF FOODS vs. Grand Canyon Education |
| BASF SE vs. HF FOODS GRP | BASF SE vs. TYSON FOODS A | BASF SE vs. PT Indofood Sukses | BASF SE vs. Lifeway Foods |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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