Correlation Between National Beverage and Hf Foods

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

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

Diversification Opportunities for National Beverage and Hf Foods

0.71

Correlation Coefficient

National Beverage  Hf Foods

Poor diversification

The 3 months correlation between National and HFFG is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Hf Foods go up and down completely randomly.

Pair Corralation between National Beverage and Hf Foods

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.49 times more return on investment than Hf Foods. However, National Beverage Corp is 2.06 times less risky than Hf Foods. It trades about 0.01 of its potential returns per unit of risk. Hf Foods Group is currently generating about -0.03 per unit of risk. If you would invest  4,216  in National Beverage Corp on October 23, 2024 and sell it today you would earn a total of  50.00  from holding National Beverage Corp or generate 1.19% return on investment over 90 days.

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

National Beverage Corp  vs.  Hf Foods Group

National Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 National Beverage and Hf Foods

The main advantage of trading using opposite National Beverage and Hf Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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 National Beverage Corp 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.