Correlation Between Hf Foods and Grocery Outlet

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

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

Diversification Opportunities for Hf Foods and Grocery Outlet

0.78

Correlation Coefficient

Hf Foods  Grocery Outlet

Poor diversification

The 3 months correlation between HFFG and Grocery is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding and Hf 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 Hf Foods Group are associated (or correlated) with Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Hf Foods i.e., Hf Foods and Grocery Outlet go up and down completely randomly.

Pair Corralation between Hf Foods and Grocery Outlet

Given the investment horizon of 90 days Hf Foods Group is expected to generate 1.02 times more return on investment than Grocery Outlet. However, Hf Foods is 1.02 times more volatile than Grocery Outlet Holding. It trades about -0.03 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.05 per unit of risk. If you would invest  332.00  in Hf Foods Group on December 19, 2024 and sell it today you would lose (53.00) from holding Hf Foods Group or give up 15.96% of portfolio value over 90 days.

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

Hf Foods Group  vs.  Grocery Outlet Holding

Hf Foods Group

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Grocery Outlet Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grocery Outlet Holding 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 very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hf Foods and Grocery Outlet

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

The idea behind Hf Foods Group and Grocery Outlet Holding 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.