Correlation Between High Liner and Energy Fuels

Can any of the company-specific risk be diversified away by investing in both High Liner and Energy Fuels 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 High Liner and Energy Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between High Liner Foods and Energy Fuels, you can compare the effects of market volatilities on High Liner and Energy Fuels 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 High Liner with a short position of Energy Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Energy Fuels.

Diversification Opportunities for High Liner and Energy Fuels

0.69

Correlation Coefficient

High Liner  Energy Fuels

Poor diversification

The 3 months correlation between High and Energy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fuels and High Liner 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 High Liner Foods are associated (or correlated) with Energy Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fuels has no effect on the direction of High Liner i.e., High Liner and Energy Fuels go up and down completely randomly.

Pair Corralation between High Liner and Energy Fuels

Assuming the 90 days trading horizon High Liner is expected to generate 1.2 times less return on investment than Energy Fuels. But when comparing it to its historical volatility, High Liner Foods is 2.43 times less risky than Energy Fuels. It trades about 0.21 of its potential returns per unit of risk. Energy Fuels is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  646.00  in Energy Fuels on September 19, 2024 and sell it today you would earn a total of  148.00  from holding Energy Fuels or generate 22.91% return on investment over 90 days.

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

High Liner Foods  vs.  Energy Fuels

High Liner Foods

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in High Liner Foods are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, High Liner displayed solid returns over the last few months and may actually be approaching a breakup point.

Energy Fuels

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Fuels are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Energy Fuels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with High Liner and Energy Fuels

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

The idea behind High Liner Foods and Energy Fuels 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.