Correlation Between Hooker Furniture and Almacenes Xito

Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and Almacenes Xito 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 Hooker Furniture and Almacenes Xito into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hooker Furniture and Almacenes xito SA, you can compare the effects of market volatilities on Hooker Furniture and Almacenes Xito 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 Hooker Furniture with a short position of Almacenes Xito. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Almacenes Xito.

Diversification Opportunities for Hooker Furniture and Almacenes Xito

0.26

Correlation Coefficient

Hooker Furniture  Almacenes Xito

Modest diversification

The 3 months correlation between Hooker and Almacenes is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Almacenes xito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almacenes xito SA and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with Almacenes Xito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almacenes xito SA has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Almacenes Xito go up and down completely randomly.

Pair Corralation between Hooker Furniture and Almacenes Xito

Given the investment horizon of 90 days Hooker Furniture is expected to generate 0.88 times more return on investment than Almacenes Xito. However, Hooker Furniture is 1.13 times less risky than Almacenes Xito. It trades about -0.01 of its potential returns per unit of risk. Almacenes xito SA is currently generating about -0.03 per unit of risk. If you would invest  1,787  in Hooker Furniture on October 11, 2024 and sell it today you would lose (460.00) from holding Hooker Furniture or give up 25.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.1%
Values	Daily Returns

Hooker Furniture  vs.  Almacenes xito SA

Hooker Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hooker Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Almacenes xito SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almacenes xito SA 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 basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hooker Furniture and Almacenes Xito

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

The idea behind Hooker Furniture and Almacenes xito SA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.