Correlation Between Seneca Foods and TDH Holdings

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

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

Diversification Opportunities for Seneca Foods and TDH Holdings

-0.08

Correlation Coefficient

Seneca Foods  TDH Holdings

Good diversification

The 3 months correlation between Seneca and TDH is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and TDH Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDH Holdings and Seneca 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 Seneca Foods Corp are associated (or correlated) with TDH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDH Holdings has no effect on the direction of Seneca Foods i.e., Seneca Foods and TDH Holdings go up and down completely randomly.

Pair Corralation between Seneca Foods and TDH Holdings

Assuming the 90 days horizon Seneca Foods Corp is expected to generate 1.1 times more return on investment than TDH Holdings. However, Seneca Foods is 1.1 times more volatile than TDH Holdings. It trades about 0.33 of its potential returns per unit of risk. TDH Holdings is currently generating about -0.19 per unit of risk. If you would invest  6,227  in Seneca Foods Corp on September 5, 2024 and sell it today you would earn a total of  1,119  from holding Seneca Foods Corp or generate 17.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Seneca Foods Corp  vs.  TDH Holdings

Seneca Foods Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

TDH Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TDH Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, TDH Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Seneca Foods and TDH Holdings

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

The idea behind Seneca Foods Corp and TDH Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.