Correlation Between Lundin Energy and HF FOODS
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and HF FOODS 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 Lundin Energy and HF FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Energy AB and HF FOODS GRP, you can compare the effects of market volatilities on Lundin Energy and HF FOODS 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 Lundin Energy with a short position of HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and HF FOODS.
Diversification Opportunities for Lundin Energy and HF FOODS
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lundin and 3GX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP and Lundin Energy 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 Lundin Energy AB are associated (or correlated) with HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of Lundin Energy i.e., Lundin Energy and HF FOODS go up and down completely randomly.
Pair Corralation between Lundin Energy and HF FOODS
Assuming the 90 days horizon Lundin Energy AB is expected to generate 0.85 times more return on investment than HF FOODS. However, Lundin Energy AB is 1.17 times less risky than HF FOODS. It trades about -0.01 of its potential returns per unit of risk. HF FOODS GRP is currently generating about -0.01 per unit of risk. If you would invest 68.00 in Lundin Energy AB on September 12, 2024 and sell it today you would lose (11.00) from holding Lundin Energy AB or give up 16.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. HF FOODS GRP
Performance |
| Timeline |
| Lundin Energy AB |
| HF FOODS GRP |
Lundin Energy and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and HF FOODS
The main advantage of trading using opposite Lundin Energy and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.| Lundin Energy vs. HF FOODS GRP | Lundin Energy vs. Performance Food Group | Lundin Energy vs. Insurance Australia Group | Lundin Energy vs. AUSTEVOLL SEAFOOD |
| HF FOODS vs. INFORMATION SVC GRP | HF FOODS vs. Pure Storage | HF FOODS vs. DATAGROUP SE | HF FOODS vs. AXWAY SOFTWARE EO |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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