Correlation Between HK Electric and Performance Food
Can any of the company-specific risk be diversified away by investing in both HK Electric and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on HK Electric and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Performance Food.
Diversification Opportunities for HK Electric and Performance Food
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HKT and Performance is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of HK Electric i.e., HK Electric and Performance Food go up and down completely randomly.
Pair Corralation between HK Electric and Performance Food
Assuming the 90 days trading horizon HK Electric Investments is expected to under-perform the Performance Food. But the stock apears to be less risky and, when comparing its historical volatility, HK Electric Investments is 2.36 times less risky than Performance Food. The stock trades about -0.22 of its potential returns per unit of risk. The Performance Food Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 8,150 in Performance Food Group on October 28, 2024 and sell it today you would earn a total of 200.00 from holding Performance Food Group or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Performance Food Group
Performance |
| Timeline |
| HK Electric Investments |
| Performance Food |
HK Electric and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Performance Food
The main advantage of trading using opposite HK Electric and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| HK Electric vs. Vishay Intertechnology | HK Electric vs. STRAYER EDUCATION | HK Electric vs. Xinhua Winshare Publishing | HK Electric vs. UPDATE SOFTWARE |
| Performance Food vs. Planet Fitness | Performance Food vs. US Physical Therapy | Performance Food vs. PURETECH HEALTH PLC | Performance Food vs. Phibro Animal Health |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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