Correlation Between Hilton Food and Caledonia Mining

Can any of the company-specific risk be diversified away by investing in both Hilton Food and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Hilton Food and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Caledonia Mining.

Diversification Opportunities for Hilton Food and Caledonia Mining

-0.16

Correlation Coefficient

Hilton Food  Caledonia Mining

Good diversification

The 3 months correlation between Hilton and Caledonia is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Hilton Food i.e., Hilton Food and Caledonia Mining go up and down completely randomly.

Pair Corralation between Hilton Food and Caledonia Mining

Assuming the 90 days trading horizon Hilton Food Group is expected to generate 0.56 times more return on investment than Caledonia Mining. However, Hilton Food Group is 1.78 times less risky than Caledonia Mining. It trades about -0.06 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.07 per unit of risk. If you would invest  96,278  in Hilton Food Group on September 3, 2024 and sell it today you would lose (5,578) from holding Hilton Food Group or give up 5.79% of portfolio value over 90 days.

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

Hilton Food Group  vs.  Caledonia Mining

Hilton Food Group

Risk-Adjusted Performance

0 of 100

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.

Caledonia Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caledonia Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hilton Food and Caledonia Mining

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

The idea behind Hilton Food Group and Caledonia Mining 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.