Correlation Between HVA Foods and Nuwara Eliya

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

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

Diversification Opportunities for HVA Foods and Nuwara Eliya

-0.14

Correlation Coefficient

HVA Foods  Nuwara Eliya

Good diversification

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

Pair Corralation between HVA Foods and Nuwara Eliya

Assuming the 90 days trading horizon HVA Foods PLC is expected to under-perform the Nuwara Eliya. In addition to that, HVA Foods is 1.46 times more volatile than Nuwara Eliya Hotels. It trades about -0.08 of its total potential returns per unit of risk. Nuwara Eliya Hotels is currently generating about 0.05 per unit of volatility. If you would invest  210,100  in Nuwara Eliya Hotels on December 25, 2024 and sell it today you would earn a total of  8,800  from holding Nuwara Eliya Hotels or generate 4.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.57%
Values	Daily Returns

HVA Foods PLC  vs.  Nuwara Eliya Hotels

HVA Foods PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days HVA Foods PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nuwara Eliya Hotels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuwara Eliya Hotels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nuwara Eliya may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HVA Foods and Nuwara Eliya

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

The idea behind HVA Foods PLC and Nuwara Eliya Hotels 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.