Correlation Between High Liner and Manulife Fin

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

Diversification Opportunities for High Liner and Manulife Fin

-0.46

Correlation Coefficient

High Liner  Manulife Fin

Very good diversification

The 3 months correlation between High and Manulife is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Manulife Fin Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Fin Non 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 Manulife Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Fin Non has no effect on the direction of High Liner i.e., High Liner and Manulife Fin go up and down completely randomly.

Pair Corralation between High Liner and Manulife Fin

Assuming the 90 days trading horizon High Liner Foods is expected to generate 3.4 times more return on investment than Manulife Fin. However, High Liner is 3.4 times more volatile than Manulife Fin Non. It trades about 0.09 of its potential returns per unit of risk. Manulife Fin Non is currently generating about -0.01 per unit of risk. If you would invest  1,575  in High Liner Foods on December 25, 2024 and sell it today you would earn a total of  126.00  from holding High Liner Foods or generate 8.0% return on investment over 90 days.

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

High Liner Foods  vs.  Manulife Fin Non

High Liner Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in High Liner Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, High Liner may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Manulife Fin Non

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manulife Fin Non has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Manulife Fin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with High Liner and Manulife Fin

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

The idea behind High Liner Foods and Manulife Fin Non 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.