Correlation Between Health and Collins Foods

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

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

Diversification Opportunities for Health and Collins Foods

0.0

Correlation Coefficient

Health  Collins Foods

Pay attention - limited upside

The 3 months correlation between Health and Collins is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health and Plant and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and Health 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 Health and Plant are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Health i.e., Health and Collins Foods go up and down completely randomly.

Pair Corralation between Health and Collins Foods

Assuming the 90 days trading horizon Health and Plant is expected to under-perform the Collins Foods. In addition to that, Health is 1.02 times more volatile than Collins Foods. It trades about -0.04 of its total potential returns per unit of risk. Collins Foods is currently generating about 0.01 per unit of volatility. If you would invest  749.00  in Collins Foods on October 11, 2024 and sell it today you would lose (17.00) from holding Collins Foods or give up 2.27% of portfolio value over 90 days.

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

Health and Plant  vs.  Collins Foods

Health and Plant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Health and Plant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods 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 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.

Pair Trading with Health and Collins Foods

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

The idea behind Health and Plant and Collins Foods 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.