Correlation Between Hf Foods and Allient
Can any of the company-specific risk be diversified away by investing in both Hf Foods and Allient 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 Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hf Foods Group and Allient, you can compare the effects of market volatilities on Hf Foods and Allient 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 Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hf Foods and Allient.
Diversification Opportunities for Hf Foods and Allient
Poor diversification
The 3 months correlation between HFFG and Allient is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Group are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Hf Foods i.e., Hf Foods and Allient go up and down completely randomly.
Pair Corralation between Hf Foods and Allient
Given the investment horizon of 90 days Hf Foods Group is expected to generate 1.37 times more return on investment than Allient. However, Hf Foods is 1.37 times more volatile than Allient. It trades about 0.01 of its potential returns per unit of risk. Allient is currently generating about -0.01 per unit of risk. If you would invest 414.00 in Hf Foods Group on September 25, 2024 and sell it today you would lose (85.00) from holding Hf Foods Group or give up 20.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hf Foods Group vs. Allient
Performance |
| Timeline |
| Hf Foods Group |
| Allient |
Hf Foods and Allient Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hf Foods and Allient
The main advantage of trading using opposite Hf Foods and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hf Foods position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.The idea behind Hf Foods Group and Allient pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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