Correlation Between Hilton Food and CleanTech Lithium

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

Diversification Opportunities for Hilton Food and CleanTech Lithium

0.48

Correlation Coefficient

Hilton Food  CleanTech Lithium

Very weak diversification

The 3 months correlation between Hilton and CleanTech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc 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 CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Hilton Food i.e., Hilton Food and CleanTech Lithium go up and down completely randomly.

Pair Corralation between Hilton Food and CleanTech Lithium

Assuming the 90 days trading horizon Hilton Food Group is expected to generate 0.35 times more return on investment than CleanTech Lithium. However, Hilton Food Group is 2.87 times less risky than CleanTech Lithium. It trades about -0.07 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.22 per unit of risk. If you would invest  90,700  in Hilton Food Group on December 1, 2024 and sell it today you would lose (5,200) from holding Hilton Food Group or give up 5.73% of portfolio value over 90 days.

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

Hilton Food Group  vs.  CleanTech Lithium plc

Hilton Food Group

Risk-Adjusted Performance

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.

CleanTech Lithium plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CleanTech Lithium plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hilton Food and CleanTech Lithium

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

The idea behind Hilton Food Group and CleanTech Lithium plc 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.