Correlation Between Hilton Food and Vitec Software

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Can any of the company-specific risk be diversified away by investing in both Hilton Food and Vitec Software 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 Hilton Food and Vitec Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and Vitec Software Group, you can compare the effects of market volatilities on Hilton Food and Vitec Software 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 Hilton Food with a short position of Vitec Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Vitec Software.

Diversification Opportunities for Hilton Food and Vitec Software

HiltonVitecDiversified AwayHiltonVitecDiversified Away100%
-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Hilton and Vitec is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group and Hilton Food 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 Hilton Food Group are associated (or correlated) with Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Hilton Food i.e., Hilton Food and Vitec Software go up and down completely randomly.

Pair Corralation between Hilton Food and Vitec Software

Assuming the 90 days trading horizon Hilton Food Group is expected to under-perform the Vitec Software. But the stock apears to be less risky and, when comparing its historical volatility, Hilton Food Group is 1.58 times less risky than Vitec Software. The stock trades about -0.03 of its potential returns per unit of risk. The Vitec Software Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  46,455  in Vitec Software Group on October 31, 2024 and sell it today you would earn a total of  9,995  from holding Vitec Software Group or generate 21.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Hilton Food Group  vs.  Vitec Software Group

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -5051015
JavaScript chart by amCharts 3.21.15HFG 0RDI
       Timeline  
Hilton Food Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hilton Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hilton Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan840860880900920940960
Vitec Software Group 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vitec Software unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan460480500520540560580

Hilton Food and Vitec Software Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.14-1.62-1.1-0.58-0.06220.410.931.451.972.49 0.050.100.150.20
JavaScript chart by amCharts 3.21.15HFG 0RDI
       Returns  

Pair Trading with Hilton Food and Vitec Software

The main advantage of trading using opposite Hilton Food and Vitec Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food position performs unexpectedly, Vitec Software 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 Vitec Software will offset losses from the drop in Vitec Software's long position.
The idea behind Hilton Food Group and Vitec Software 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.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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