Correlation Between Hammond Power and High Liner
Can any of the company-specific risk be diversified away by investing in both Hammond Power and High Liner 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 Hammond Power and High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hammond Power Solutions and High Liner Foods, you can compare the effects of market volatilities on Hammond Power and High Liner 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 Hammond Power with a short position of High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hammond Power and High Liner.
Diversification Opportunities for Hammond Power and High Liner
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hammond and High is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hammond Power Solutions and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods and Hammond Power 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 Hammond Power Solutions are associated (or correlated) with High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Hammond Power i.e., Hammond Power and High Liner go up and down completely randomly.
Pair Corralation between Hammond Power and High Liner
Assuming the 90 days trading horizon Hammond Power Solutions is expected to under-perform the High Liner. In addition to that, Hammond Power is 2.66 times more volatile than High Liner Foods. It trades about -0.17 of its total potential returns per unit of risk. High Liner Foods is currently generating about -0.01 per unit of volatility. If you would invest 1,555 in High Liner Foods on October 29, 2024 and sell it today you would lose (7.00) from holding High Liner Foods or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hammond Power Solutions vs. High Liner Foods
Performance |
| Timeline |
| Hammond Power Solutions |
| High Liner Foods |
Hammond Power and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hammond Power and High Liner
The main advantage of trading using opposite Hammond Power and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hammond Power position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Hammond Power vs. Hammond Manufacturing | Hammond Power vs. Firan Technology Group | Hammond Power vs. Supremex | Hammond Power vs. Geodrill Limited |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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