Correlation Between Amexdrug and Hanover Foods

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

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

Diversification Opportunities for Amexdrug and Hanover Foods

0.0

Correlation Coefficient

Amexdrug  Hanover Foods

Pay attention - limited upside

The 3 months correlation between Amexdrug and Hanover is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amexdrug and Hanover Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Foods and Amexdrug 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 Amexdrug are associated (or correlated) with Hanover Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Foods has no effect on the direction of Amexdrug i.e., Amexdrug and Hanover Foods go up and down completely randomly.

Pair Corralation between Amexdrug and Hanover Foods

If you would invest  6,300  in Hanover Foods on December 23, 2024 and sell it today you would lose (300.00) from holding Hanover Foods or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.77%
Values	Daily Returns

Amexdrug  vs.  Hanover Foods

Amexdrug

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amexdrug has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amexdrug is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Hanover Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanover Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hanover Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amexdrug and Hanover Foods

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

The idea behind Amexdrug and Hanover Foods 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.