Correlation Between Hunya Foods and Advanced Echem

Can any of the company-specific risk be diversified away by investing in both Hunya Foods and Advanced Echem 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 Hunya Foods and Advanced Echem into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hunya Foods Co and Advanced Echem Materials, you can compare the effects of market volatilities on Hunya Foods and Advanced Echem 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 Hunya Foods with a short position of Advanced Echem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunya Foods and Advanced Echem.

Diversification Opportunities for Hunya Foods and Advanced Echem

0.49

Correlation Coefficient

Hunya Foods  Advanced Echem

Very weak diversification

The 3 months correlation between Hunya and Advanced is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hunya Foods Co and Advanced Echem Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Echem Materials and Hunya Foods 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 Hunya Foods Co are associated (or correlated) with Advanced Echem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Echem Materials has no effect on the direction of Hunya Foods i.e., Hunya Foods and Advanced Echem go up and down completely randomly.

Pair Corralation between Hunya Foods and Advanced Echem

Assuming the 90 days trading horizon Hunya Foods Co is expected to under-perform the Advanced Echem. But the stock apears to be less risky and, when comparing its historical volatility, Hunya Foods Co is 3.0 times less risky than Advanced Echem. The stock trades about -0.04 of its potential returns per unit of risk. The Advanced Echem Materials is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  70,200  in Advanced Echem Materials on October 22, 2024 and sell it today you would lose (1,400) from holding Advanced Echem Materials or give up 1.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hunya Foods Co  vs.  Advanced Echem Materials

Hunya Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hunya Foods Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hunya Foods is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Advanced Echem Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Echem Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Advanced Echem is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hunya Foods and Advanced Echem

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

The idea behind Hunya Foods Co and Advanced Echem Materials 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.