Correlation Between Edita Food and Hansa Investment
Can any of the company-specific risk be diversified away by investing in both Edita Food and Hansa Investment 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 Edita Food and Hansa Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and Hansa Investment, you can compare the effects of market volatilities on Edita Food and Hansa Investment 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 Edita Food with a short position of Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Hansa Investment.
Diversification Opportunities for Edita Food and Hansa Investment
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Edita and Hansa is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment and Edita Food 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 Edita Food Industries are associated (or correlated) with Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Edita Food i.e., Edita Food and Hansa Investment go up and down completely randomly.
Pair Corralation between Edita Food and Hansa Investment
Assuming the 90 days trading horizon Edita Food Industries is expected to under-perform the Hansa Investment. In addition to that, Edita Food is 5.45 times more volatile than Hansa Investment. It trades about -0.19 of its total potential returns per unit of risk. Hansa Investment is currently generating about -0.03 per unit of volatility. If you would invest 22,800 in Hansa Investment on August 26, 2024 and sell it today you would lose (200.00) from holding Hansa Investment or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edita Food Industries vs. Hansa Investment
Performance |
| Timeline |
| Edita Food Industries |
| Hansa Investment |
Edita Food and Hansa Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Hansa Investment
The main advantage of trading using opposite Edita Food and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.| Edita Food vs. Samsung Electronics Co | Edita Food vs. Samsung Electronics Co | Edita Food vs. Hyundai Motor | Edita Food vs. Toyota Motor Corp |
| Hansa Investment vs. CATCo Reinsurance Opportunities | Hansa Investment vs. BH Macro Limited | Hansa Investment vs. TMT Investments PLC | Hansa Investment vs. Intermediate Capital Group |
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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