Correlation Between HVA Foods and Singhe Hospitals

Can any of the company-specific risk be diversified away by investing in both HVA Foods and Singhe Hospitals 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 Singhe Hospitals 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 Singhe Hospitals, you can compare the effects of market volatilities on HVA Foods and Singhe Hospitals 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 Singhe Hospitals. Check out your portfolio center. Please also check ongoing floating volatility patterns of HVA Foods and Singhe Hospitals.

Diversification Opportunities for HVA Foods and Singhe Hospitals

0.35

Correlation Coefficient

HVA Foods  Singhe Hospitals

Weak diversification

The 3 months correlation between HVA and Singhe is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding HVA Foods PLC and Singhe Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singhe Hospitals 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 Singhe Hospitals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singhe Hospitals has no effect on the direction of HVA Foods i.e., HVA Foods and Singhe Hospitals go up and down completely randomly.

Pair Corralation between HVA Foods and Singhe Hospitals

Assuming the 90 days trading horizon HVA Foods is expected to generate 1.3 times less return on investment than Singhe Hospitals. In addition to that, HVA Foods is 1.22 times more volatile than Singhe Hospitals. It trades about 0.03 of its total potential returns per unit of risk. Singhe Hospitals is currently generating about 0.04 per unit of volatility. If you would invest  230.00  in Singhe Hospitals on October 9, 2024 and sell it today you would earn a total of  50.00  from holding Singhe Hospitals or generate 21.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.7%
Values	Daily Returns

HVA Foods PLC  vs.  Singhe Hospitals

HVA Foods PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HVA Foods PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HVA Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Singhe Hospitals

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Singhe Hospitals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Singhe Hospitals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HVA Foods and Singhe Hospitals

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

The idea behind HVA Foods PLC and Singhe Hospitals 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.