Correlation Between Hanover Foods and Keweenaw Land

Can any of the company-specific risk be diversified away by investing in both Hanover Foods and Keweenaw Land 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 Hanover Foods and Keweenaw Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hanover Foods and Keweenaw Land

-0.14

Correlation Coefficient

Hanover Foods  Keweenaw Land

Good diversification

The 3 months correlation between Hanover and Keweenaw is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hanover Foods and Keweenaw Land Association in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keweenaw Land Association and Hanover Foods 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 Hanover Foods are associated (or correlated) with Keweenaw Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keweenaw Land Association has no effect on the direction of Hanover Foods i.e., Hanover Foods and Keweenaw Land go up and down completely randomly.

Pair Corralation between Hanover Foods and Keweenaw Land

Assuming the 90 days horizon Hanover Foods is expected to generate 20.2 times less return on investment than Keweenaw Land. But when comparing it to its historical volatility, Hanover Foods is 2.67 times less risky than Keweenaw Land. It trades about 0.01 of its potential returns per unit of risk. Keweenaw Land Association is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,279  in Keweenaw Land Association on September 25, 2024 and sell it today you would earn a total of  221.00  from holding Keweenaw Land Association or generate 6.74% return on investment over 90 days.

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

Hanover Foods  vs.  Keweenaw Land Association

Hanover Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Keweenaw Land Association

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Keweenaw Land Association are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Keweenaw Land may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanover Foods and Keweenaw Land

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

The idea behind Hanover Foods and Keweenaw Land Association 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .