Correlation Between CN MODERN and Hoist Finance

Can any of the company-specific risk be diversified away by investing in both CN MODERN and Hoist Finance 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 CN MODERN and Hoist Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CN MODERN DAIRY and Hoist Finance AB, you can compare the effects of market volatilities on CN MODERN and Hoist Finance 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 CN MODERN with a short position of Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Hoist Finance.

Diversification Opportunities for CN MODERN and Hoist Finance

0.12

Correlation Coefficient

CN MODERN  Hoist Finance

Average diversification

The 3 months correlation between 07M and Hoist is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of CN MODERN i.e., CN MODERN and Hoist Finance go up and down completely randomly.

Pair Corralation between CN MODERN and Hoist Finance

Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 1.62 times more return on investment than Hoist Finance. However, CN MODERN is 1.62 times more volatile than Hoist Finance AB. It trades about 0.01 of its potential returns per unit of risk. Hoist Finance AB is currently generating about -0.03 per unit of risk. If you would invest  10.00  in CN MODERN DAIRY on October 11, 2024 and sell it today you would lose (0.10) from holding CN MODERN DAIRY or give up 1.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

CN MODERN DAIRY  vs.  Hoist Finance AB

CN MODERN DAIRY

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN MODERN DAIRY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, CN MODERN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hoist Finance AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hoist Finance AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hoist Finance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CN MODERN and Hoist Finance

The main advantage of trading using opposite CN MODERN and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Hoist Finance 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 Hoist Finance will offset losses from the drop in Hoist Finance's long position.

The idea behind CN MODERN DAIRY and Hoist Finance AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.