Correlation Between Retail Food and Hansen Technologies
Can any of the company-specific risk be diversified away by investing in both Retail Food and Hansen Technologies 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 Retail Food and Hansen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Hansen Technologies, you can compare the effects of market volatilities on Retail Food and Hansen Technologies 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 Retail Food with a short position of Hansen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Hansen Technologies.
Diversification Opportunities for Retail Food and Hansen Technologies
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Retail and Hansen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and Retail Food 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 Retail Food Group are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of Retail Food i.e., Retail Food and Hansen Technologies go up and down completely randomly.
Pair Corralation between Retail Food and Hansen Technologies
Assuming the 90 days trading horizon Retail Food is expected to generate 1.62 times less return on investment than Hansen Technologies. In addition to that, Retail Food is 1.82 times more volatile than Hansen Technologies. It trades about 0.15 of its total potential returns per unit of risk. Hansen Technologies is currently generating about 0.45 per unit of volatility. If you would invest 497.00 in Hansen Technologies on August 30, 2024 and sell it today you would earn a total of 80.00 from holding Hansen Technologies or generate 16.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Hansen Technologies
Performance |
| Timeline |
| Retail Food Group |
| Hansen Technologies |
Retail Food and Hansen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Hansen Technologies
The main advantage of trading using opposite Retail Food and Hansen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Hansen Technologies 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 Hansen Technologies will offset losses from the drop in Hansen Technologies' long position.| Retail Food vs. Autosports Group | Retail Food vs. AiMedia Technologies | Retail Food vs. BKI Investment | Retail Food vs. ARN Media Limited |
| Hansen Technologies vs. PVW Resources | Hansen Technologies vs. Woolworths | Hansen Technologies vs. Wesfarmers | Hansen Technologies vs. Coles Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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