Correlation Between Hf Foods and Davis Commodities
Can any of the company-specific risk be diversified away by investing in both Hf Foods and Davis Commodities 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 Davis Commodities 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 Davis Commodities Limited, you can compare the effects of market volatilities on Hf Foods and Davis Commodities 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 Davis Commodities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hf Foods and Davis Commodities.
Diversification Opportunities for Hf Foods and Davis Commodities
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HFFG and Davis is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group and Davis Commodities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Commodities 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 Davis Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Commodities has no effect on the direction of Hf Foods i.e., Hf Foods and Davis Commodities go up and down completely randomly.
Pair Corralation between Hf Foods and Davis Commodities
Given the investment horizon of 90 days Hf Foods Group is expected to generate 0.73 times more return on investment than Davis Commodities. However, Hf Foods Group is 1.38 times less risky than Davis Commodities. It trades about 0.09 of its potential returns per unit of risk. Davis Commodities Limited is currently generating about -0.33 per unit of risk. If you would invest 349.00 in Hf Foods Group on August 30, 2024 and sell it today you would earn a total of 12.00 from holding Hf Foods Group or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hf Foods Group vs. Davis Commodities Limited
Performance |
| Timeline |
| Hf Foods Group |
| Davis Commodities |
Hf Foods and Davis Commodities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hf Foods and Davis Commodities
The main advantage of trading using opposite Hf Foods and Davis Commodities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hf Foods position performs unexpectedly, Davis Commodities 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 Davis Commodities will offset losses from the drop in Davis Commodities' long position.| Hf Foods vs. Innovative Food Hldg | Hf Foods vs. G Willi Food International | Hf Foods vs. Calavo Growers | Hf Foods vs. The Chefs Warehouse |
| Davis Commodities vs. Naked Wines plc | Davis Commodities vs. Glacier Bancorp | Davis Commodities vs. AmTrust Financial Services | Davis Commodities vs. PennantPark Floating Rate |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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