Correlation Between Caledonia Mining and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Hilton Food 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 Caledonia Mining and Hilton Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Hilton Food Group, you can compare the effects of market volatilities on Caledonia Mining and Hilton Food 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 Caledonia Mining with a short position of Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Hilton Food.
Diversification Opportunities for Caledonia Mining and Hilton Food
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caledonia and Hilton is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food Group and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Hilton Food go up and down completely randomly.
Pair Corralation between Caledonia Mining and Hilton Food
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the Hilton Food. In addition to that, Caledonia Mining is 1.5 times more volatile than Hilton Food Group. It trades about -0.35 of its total potential returns per unit of risk. Hilton Food Group is currently generating about -0.15 per unit of volatility. If you would invest 92,400 in Hilton Food Group on October 12, 2024 and sell it today you would lose (3,200) from holding Hilton Food Group or give up 3.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Hilton Food Group
Performance |
| Timeline |
| Caledonia Mining |
| Hilton Food Group |
Caledonia Mining and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Hilton Food
The main advantage of trading using opposite Caledonia Mining and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food's long position.| Caledonia Mining vs. Telecom Italia SpA | Caledonia Mining vs. Waste Management | Caledonia Mining vs. Ecclesiastical Insurance Office | Caledonia Mining vs. Spirent Communications plc |
| Hilton Food vs. Samsung Electronics Co | Hilton Food vs. Samsung Electronics Co | Hilton Food vs. Toyota Motor Corp | Hilton Food vs. MOL Hungarian Oil |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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