Correlation Between HF FOODS and WT OFFSHORE
Can any of the company-specific risk be diversified away by investing in both HF FOODS and WT OFFSHORE 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 WT OFFSHORE 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 WT OFFSHORE, you can compare the effects of market volatilities on HF FOODS and WT OFFSHORE 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 WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF FOODS and WT OFFSHORE.
Diversification Opportunities for HF FOODS and WT OFFSHORE
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 3GX and UWV is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HF FOODS GRP and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE 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 WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of HF FOODS i.e., HF FOODS and WT OFFSHORE go up and down completely randomly.
Pair Corralation between HF FOODS and WT OFFSHORE
Assuming the 90 days horizon HF FOODS GRP is expected to generate 0.7 times more return on investment than WT OFFSHORE. However, HF FOODS GRP is 1.43 times less risky than WT OFFSHORE. It trades about 0.29 of its potential returns per unit of risk. WT OFFSHORE is currently generating about -0.12 per unit of risk. If you would invest 298.00 in HF FOODS GRP on September 4, 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 Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
HF FOODS GRP vs. WT OFFSHORE
Performance |
| Timeline |
| HF FOODS GRP |
| WT OFFSHORE |
HF FOODS and WT OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HF FOODS and WT OFFSHORE
The main advantage of trading using opposite HF FOODS and WT OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF FOODS position performs unexpectedly, WT OFFSHORE 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 WT OFFSHORE will offset losses from the drop in WT OFFSHORE's long position.| HF FOODS vs. Performance Food Group | HF FOODS vs. Superior Plus Corp | HF FOODS vs. NMI Holdings | HF FOODS vs. Origin Agritech |
| WT OFFSHORE vs. TOTAL GABON | WT OFFSHORE vs. Walgreens Boots Alliance | WT OFFSHORE vs. Peak Resources Limited |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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