Correlation Between Hormel Foods and Orkla ASA

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

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

Diversification Opportunities for Hormel Foods and Orkla ASA

-0.54

Correlation Coefficient

Hormel Foods  Orkla ASA

Excellent diversification

The 3 months correlation between Hormel and Orkla is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Orkla ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orkla ASA and Hormel 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 Hormel Foods are associated (or correlated) with Orkla ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orkla ASA has no effect on the direction of Hormel Foods i.e., Hormel Foods and Orkla ASA go up and down completely randomly.

Pair Corralation between Hormel Foods and Orkla ASA

Considering the 90-day investment horizon Hormel Foods is expected to under-perform the Orkla ASA. In addition to that, Hormel Foods is 1.52 times more volatile than Orkla ASA. It trades about -0.07 of its total potential returns per unit of risk. Orkla ASA is currently generating about 0.15 per unit of volatility. If you would invest  888.00  in Orkla ASA on December 25, 2024 and sell it today you would earn a total of  76.00  from holding Orkla ASA or generate 8.56% return on investment over 90 days.

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

Hormel Foods  vs.  Orkla ASA

Hormel Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hormel 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 persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Orkla ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orkla ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Orkla ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hormel Foods and Orkla ASA

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

The idea behind Hormel Foods and Orkla ASA 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.