Correlation Between Citrus Leisure and HVA Foods

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

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

Diversification Opportunities for Citrus Leisure and HVA Foods

0.0

Correlation Coefficient

Citrus Leisure  HVA Foods

Pay attention - limited upside

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

Pair Corralation between Citrus Leisure and HVA Foods

Assuming the 90 days trading horizon Citrus Leisure is expected to generate 11.55 times less return on investment than HVA Foods. But when comparing it to its historical volatility, Citrus Leisure PLC is 1.58 times less risky than HVA Foods. It trades about 0.01 of its potential returns per unit of risk. HVA Foods PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  310.00  in HVA Foods PLC on September 15, 2024 and sell it today you would earn a total of  80.00  from holding HVA Foods PLC or generate 25.81% return on investment over 90 days.

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

Citrus Leisure PLC  vs.  HVA Foods PLC

Citrus Leisure PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citrus Leisure PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Citrus Leisure is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HVA Foods PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HVA Foods PLC are ranked lower than 8 (%) 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.

Pair Trading with Citrus Leisure and HVA Foods

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

The idea behind Citrus Leisure PLC and HVA Foods PLC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.