Correlation Between Flowers Foods and TDH Holdings

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

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

Diversification Opportunities for Flowers Foods and TDH Holdings

-0.36

Correlation Coefficient

Flowers Foods  TDH Holdings

Very good diversification

The 3 months correlation between Flowers and TDH is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and TDH Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDH Holdings and Flowers 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 Flowers Foods are associated (or correlated) with TDH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDH Holdings has no effect on the direction of Flowers Foods i.e., Flowers Foods and TDH Holdings go up and down completely randomly.

Pair Corralation between Flowers Foods and TDH Holdings

Considering the 90-day investment horizon Flowers Foods is expected to under-perform the TDH Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Flowers Foods is 2.87 times less risky than TDH Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The TDH Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  120.00  in TDH Holdings on December 27, 2024 and sell it today you would earn a total of  2.00  from holding TDH Holdings or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Flowers Foods  vs.  TDH Holdings

Flowers Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flowers Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

TDH Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TDH Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, TDH Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Flowers Foods and TDH Holdings

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

The idea behind Flowers Foods and TDH Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.