Correlation Between High Liner and Hammond Power
Can any of the company-specific risk be diversified away by investing in both High Liner and Hammond Power 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 High Liner and Hammond Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Hammond Power Solutions, you can compare the effects of market volatilities on High Liner and Hammond Power 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 High Liner with a short position of Hammond Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Hammond Power.
Diversification Opportunities for High Liner and Hammond Power
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between High and Hammond is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Hammond Power Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammond Power Solutions and High Liner 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 High Liner Foods are associated (or correlated) with Hammond Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammond Power Solutions has no effect on the direction of High Liner i.e., High Liner and Hammond Power go up and down completely randomly.
Pair Corralation between High Liner and Hammond Power
Assuming the 90 days trading horizon High Liner is expected to generate 6.54 times less return on investment than Hammond Power. But when comparing it to its historical volatility, High Liner Foods is 1.97 times less risky than Hammond Power. It trades about 0.03 of its potential returns per unit of risk. Hammond Power Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,614 in Hammond Power Solutions on November 7, 2024 and sell it today you would earn a total of 7,647 from holding Hammond Power Solutions or generate 292.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Hammond Power Solutions
Performance |
| Timeline |
| High Liner Foods |
| Hammond Power Solutions |
High Liner and Hammond Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Hammond Power
The main advantage of trading using opposite High Liner and Hammond Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, Hammond Power 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 Hammond Power will offset losses from the drop in Hammond Power's long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| Hammond Power vs. Hammond Manufacturing | Hammond Power vs. Firan Technology Group | Hammond Power vs. Supremex | Hammond Power vs. Geodrill Limited |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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