Correlation Between Hardide PLC and Edita Food

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

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

Diversification Opportunities for Hardide PLC and Edita Food

0.5

Correlation Coefficient

Hardide PLC  Edita Food

Very weak diversification

The 3 months correlation between Hardide and Edita is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hardide PLC 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 Hardide PLC 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 Hardide PLC 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 Hardide PLC i.e., Hardide PLC and Edita Food go up and down completely randomly.

Pair Corralation between Hardide PLC and Edita Food

Assuming the 90 days trading horizon Hardide PLC is expected to under-perform the Edita Food. In addition to that, Hardide PLC is 1.11 times more volatile than Edita Food Industries. It trades about -0.04 of its total potential returns per unit of risk. Edita Food Industries is currently generating about 0.01 per unit of volatility. If you would invest  207.00  in Edita Food Industries on September 26, 2024 and sell it today you would lose (7.00) from holding Edita Food Industries or give up 3.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Hardide PLC  vs.  Edita Food Industries

Hardide PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hardide PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hardide PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Edita Food Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edita Food Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hardide PLC and Edita Food

The main advantage of trading using opposite Hardide PLC and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hardide PLC 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 Hardide PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.