Correlation Between HF FOODS and Commonwealth Bank

Can any of the company-specific risk be diversified away by investing in both HF FOODS and Commonwealth Bank 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 HF FOODS and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HF FOODS GRP and Commonwealth Bank of, you can compare the effects of market volatilities on HF FOODS and Commonwealth Bank 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 HF FOODS with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF FOODS and Commonwealth Bank.

Diversification Opportunities for HF FOODS and Commonwealth Bank

0.66

Correlation Coefficient

HF FOODS  Commonwealth Bank

Poor diversification

The 3 months correlation between 3GX and Commonwealth is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding HF FOODS GRP and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and HF 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 HF FOODS GRP are associated (or correlated) with Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of HF FOODS i.e., HF FOODS and Commonwealth Bank go up and down completely randomly.

Pair Corralation between HF FOODS and Commonwealth Bank

Assuming the 90 days horizon HF FOODS GRP is expected to under-perform the Commonwealth Bank. In addition to that, HF FOODS is 2.01 times more volatile than Commonwealth Bank of. It trades about -0.02 of its total potential returns per unit of risk. Commonwealth Bank of is currently generating about 0.18 per unit of volatility. If you would invest  8,427  in Commonwealth Bank of on October 12, 2024 and sell it today you would earn a total of  1,151  from holding Commonwealth Bank of or generate 13.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

HF FOODS GRP  vs.  Commonwealth Bank of

HF FOODS GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF FOODS GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HF FOODS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Commonwealth Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Bank of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Commonwealth Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HF FOODS and Commonwealth Bank

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

The idea behind HF FOODS GRP and Commonwealth Bank of 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.