Correlation Between Hydrofarm Holdings and Danimer Scientific
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and Danimer Scientific 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 Hydrofarm Holdings and Danimer Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydrofarm Holdings Group and Danimer Scientific, you can compare the effects of market volatilities on Hydrofarm Holdings and Danimer Scientific 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 Hydrofarm Holdings with a short position of Danimer Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and Danimer Scientific.
Diversification Opportunities for Hydrofarm Holdings and Danimer Scientific
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hydrofarm and Danimer is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and Danimer Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danimer Scientific and Hydrofarm Holdings 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 Hydrofarm Holdings Group are associated (or correlated) with Danimer Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danimer Scientific has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and Danimer Scientific go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and Danimer Scientific
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to generate 0.22 times more return on investment than Danimer Scientific. However, Hydrofarm Holdings Group is 4.47 times less risky than Danimer Scientific. It trades about 0.07 of its potential returns per unit of risk. Danimer Scientific is currently generating about -0.48 per unit of risk. If you would invest 61.00 in Hydrofarm Holdings Group on October 26, 2024 and sell it today you would earn a total of 2.62 from holding Hydrofarm Holdings Group or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 36.84% |
| Values | Daily Returns |
Hydrofarm Holdings Group vs. Danimer Scientific
Performance |
| Timeline |
| Hydrofarm Holdings |
| Danimer Scientific |
Hydrofarm Holdings and Danimer Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and Danimer Scientific
The main advantage of trading using opposite Hydrofarm Holdings and Danimer Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, Danimer Scientific 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 Danimer Scientific will offset losses from the drop in Danimer Scientific's long position.| Hydrofarm Holdings vs. Gencor Industries | Hydrofarm Holdings vs. CEA Industries | Hydrofarm Holdings vs. Arts Way Manufacturing Co | Hydrofarm Holdings vs. CubicFarm Systems Corp |
| Danimer Scientific vs. LyondellBasell Industries NV | Danimer Scientific vs. International Flavors Fragrances | Danimer Scientific vs. Cabot | Danimer Scientific vs. Westlake Chemical |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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