Correlation Between HK Electric and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both HK Electric and Nomad Foods 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 HK Electric and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and Nomad Foods, you can compare the effects of market volatilities on HK Electric and Nomad Foods 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 HK Electric with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Nomad Foods.
Diversification Opportunities for HK Electric and Nomad Foods
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HKT and Nomad is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and HK Electric 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 HK Electric Investments are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of HK Electric i.e., HK Electric and Nomad Foods go up and down completely randomly.
Pair Corralation between HK Electric and Nomad Foods
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.97 times more return on investment than Nomad Foods. However, HK Electric is 1.97 times more volatile than Nomad Foods. It trades about 0.1 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.0 per unit of risk. If you would invest 46.00 in HK Electric Investments on October 18, 2024 and sell it today you would earn a total of 19.00 from holding HK Electric Investments or generate 41.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Nomad Foods
Performance |
| Timeline |
| HK Electric Investments |
| Nomad Foods |
HK Electric and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Nomad Foods
The main advantage of trading using opposite HK Electric and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| HK Electric vs. RETAIL FOOD GROUP | HK Electric vs. CENTURIA OFFICE REIT | HK Electric vs. NURAN WIRELESS INC | HK Electric vs. CARSALESCOM |
| Nomad Foods vs. Dalata Hotel Group | Nomad Foods vs. PennantPark Investment | Nomad Foods vs. HK Electric Investments | Nomad Foods vs. MidCap Financial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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