Correlation Between London Security and Hilton Food
Can any of the company-specific risk be diversified away by investing in both London Security and Hilton 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 London Security and Hilton Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Hilton Food Group, you can compare the effects of market volatilities on London Security and Hilton 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 London Security with a short position of Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Hilton Food.
Diversification Opportunities for London Security and Hilton Food
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between London and Hilton is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food Group and London Security 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 London Security Plc are associated (or correlated) with Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of London Security i.e., London Security and Hilton Food go up and down completely randomly.
Pair Corralation between London Security and Hilton Food
Assuming the 90 days trading horizon London Security Plc is expected to generate 0.87 times more return on investment than Hilton Food. However, London Security Plc is 1.15 times less risky than Hilton Food. It trades about 0.22 of its potential returns per unit of risk. Hilton Food Group is currently generating about 0.07 per unit of risk. If you would invest 325,000 in London Security Plc on September 24, 2024 and sell it today you would earn a total of 15,000 from holding London Security Plc or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. Hilton Food Group
Performance |
| Timeline |
| London Security Plc |
| Hilton Food Group |
London Security and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Hilton Food
The main advantage of trading using opposite London Security and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, Hilton 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 Hilton Food will offset losses from the drop in Hilton Food's long position.| London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor Corp |
| Hilton Food vs. Vitec Software Group | Hilton Food vs. iShares Physical Silver | Hilton Food vs. Axway Software SA | Hilton Food vs. Caledonia Mining |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |