Correlation Between Hansa Investment and Edita Food

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

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

Diversification Opportunities for Hansa Investment and Edita Food

-0.27

Correlation Coefficient

Hansa Investment  Edita Food

Very good diversification

The 3 months correlation between Hansa and Edita is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries and Hansa Investment 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 Hansa Investment are associated (or correlated) with Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Hansa Investment i.e., Hansa Investment and Edita Food go up and down completely randomly.

Pair Corralation between Hansa Investment and Edita Food

Assuming the 90 days trading horizon Hansa Investment is expected to under-perform the Edita Food. But the stock apears to be less risky and, when comparing its historical volatility, Hansa Investment is 1.07 times less risky than Edita Food. The stock trades about -0.05 of its potential returns per unit of risk. The Edita Food Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Edita Food Industries on December 29, 2024 and sell it today you would earn a total of  18.00  from holding Edita Food Industries or generate 9.0% return on investment over 90 days.

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

Hansa Investment  vs.  Edita Food Industries

Hansa Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hansa Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hansa Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Edita Food Industries

Risk-Adjusted Performance

Modest

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

Pair Trading with Hansa Investment and Edita Food

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

The idea behind Hansa Investment and Edita Food Industries 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.