Correlation Between HYDROFARM HLD and SENECA FOODS-A

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

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

Diversification Opportunities for HYDROFARM HLD and SENECA FOODS-A

-0.04

Correlation Coefficient

HYDROFARM HLD  SENECA FOODS-A

Good diversification

The 3 months correlation between HYDROFARM and SENECA is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A and HYDROFARM HLD 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 HYDROFARM HLD GRP are associated (or correlated) with SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and SENECA FOODS-A go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and SENECA FOODS-A

Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to generate 64.39 times more return on investment than SENECA FOODS-A. However, HYDROFARM HLD is 64.39 times more volatile than SENECA FOODS A. It trades about 0.11 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.09 per unit of risk. If you would invest  575.00  in HYDROFARM HLD GRP on December 28, 2024 and sell it today you would lose (45.00) from holding HYDROFARM HLD GRP or give up 7.83% of portfolio value over 90 days.

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

HYDROFARM HLD GRP  vs.  SENECA FOODS A

HYDROFARM HLD GRP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYDROFARM HLD GRP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, HYDROFARM HLD reported solid returns over the last few months and may actually be approaching a breakup point.

SENECA FOODS A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SENECA FOODS-A may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HYDROFARM HLD and SENECA FOODS-A

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

The idea behind HYDROFARM HLD GRP and SENECA FOODS A 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.