Correlation Between Hanover Foods and Fresh Grapes

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

By analyzing existing cross correlation between Hanover Foods and Fresh Grapes LLC, you can compare the effects of market volatilities on Hanover Foods and Fresh Grapes 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 Fresh Grapes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanover Foods and Fresh Grapes.

Diversification Opportunities for Hanover Foods and Fresh Grapes

0.18

Correlation Coefficient

Hanover Foods  Fresh Grapes

Average diversification

The 3 months correlation between Hanover and Fresh is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hanover Foods and Fresh Grapes LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Grapes LLC 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 Fresh Grapes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Grapes LLC has no effect on the direction of Hanover Foods i.e., Hanover Foods and Fresh Grapes go up and down completely randomly.

Pair Corralation between Hanover Foods and Fresh Grapes

Assuming the 90 days horizon Hanover Foods is expected to under-perform the Fresh Grapes. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hanover Foods is 4.14 times less risky than Fresh Grapes. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Fresh Grapes LLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  62.00  in Fresh Grapes LLC on October 15, 2024 and sell it today you would earn a total of  0.00  from holding Fresh Grapes LLC or generate 0.0% return on investment over 90 days.

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

Hanover Foods  vs.  Fresh Grapes LLC

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Fresh Grapes LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresh Grapes LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fresh Grapes is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hanover Foods and Fresh Grapes

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

The idea behind Hanover Foods and Fresh Grapes LLC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.