Correlation Between Retail Food and Hub24

Can any of the company-specific risk be diversified away by investing in both Retail Food and Hub24 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 Retail Food and Hub24 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Retail Food Group and Hub24, you can compare the effects of market volatilities on Retail Food and Hub24 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 Retail Food with a short position of Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Hub24.

Diversification Opportunities for Retail Food and Hub24

0.62

Correlation Coefficient

Retail Food  Hub24

Poor diversification

The 3 months correlation between Retail and Hub24 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 and Retail Food 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 Retail Food Group are associated (or correlated) with Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of Retail Food i.e., Retail Food and Hub24 go up and down completely randomly.

Pair Corralation between Retail Food and Hub24

Assuming the 90 days trading horizon Retail Food Group is expected to under-perform the Hub24. In addition to that, Retail Food is 1.48 times more volatile than Hub24. It trades about -0.14 of its total potential returns per unit of risk. Hub24 is currently generating about -0.02 per unit of volatility. If you would invest  6,729  in Hub24 on October 23, 2024 and sell it today you would lose (206.00) from holding Hub24 or give up 3.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Retail Food Group  vs.  Hub24

Retail Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Food Group 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.

Hub24

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hub24 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Hub24 is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Retail Food and Hub24

The main advantage of trading using opposite Retail Food and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.

The idea behind Retail Food Group and Hub24 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .