Correlation Between Citi Trends and Hf Foods

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

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

Diversification Opportunities for Citi Trends and Hf Foods

-0.3

Correlation Coefficient

Citi Trends  Hf Foods

Very good diversification

The 3 months correlation between Citi and HFFG is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Hf Foods Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hf Foods Group and Citi Trends 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 Citi Trends are associated (or correlated) with Hf Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hf Foods Group has no effect on the direction of Citi Trends i.e., Citi Trends and Hf Foods go up and down completely randomly.

Pair Corralation between Citi Trends and Hf Foods

Given the investment horizon of 90 days Citi Trends is expected to generate 0.57 times more return on investment than Hf Foods. However, Citi Trends is 1.75 times less risky than Hf Foods. It trades about 0.26 of its potential returns per unit of risk. Hf Foods Group is currently generating about -0.55 per unit of risk. If you would invest  2,523  in Citi Trends on October 21, 2024 and sell it today you would earn a total of  147.00  from holding Citi Trends or generate 5.83% return on investment over 90 days.

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

Citi Trends  vs.  Hf Foods Group

Citi Trends

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Citi Trends displayed solid returns over the last few months and may actually be approaching a breakup point.

Hf Foods Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hf Foods Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Citi Trends and Hf Foods

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

The idea behind Citi Trends and Hf Foods Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.