Correlation Between Hf Foods and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Hf Foods and Microchip Technology 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 Microchip Technology 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 Microchip Technology, you can compare the effects of market volatilities on Hf Foods and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hf Foods and Microchip Technology.
Diversification Opportunities for Hf Foods and Microchip Technology
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between HFFG and Microchip is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Hf Foods i.e., Hf Foods and Microchip Technology go up and down completely randomly.
Pair Corralation between Hf Foods and Microchip Technology
Given the investment horizon of 90 days Hf Foods Group is expected to generate 0.93 times more return on investment than Microchip Technology. However, Hf Foods Group is 1.07 times less risky than Microchip Technology. It trades about 0.23 of its potential returns per unit of risk. Microchip Technology is currently generating about -0.12 per unit of risk. If you would invest 342.00 in Hf Foods Group on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Hf Foods Group or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hf Foods Group vs. Microchip Technology
Performance |
| Timeline |
| Hf Foods Group |
| Microchip Technology |
Hf Foods and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hf Foods and Microchip Technology
The main advantage of trading using opposite Hf Foods and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hf Foods position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's 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 |
| Microchip Technology vs. NXP Semiconductors NV | Microchip Technology vs. GSI Technology | Microchip Technology vs. MaxLinear | Microchip Technology vs. Texas Instruments Incorporated |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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