Correlation Between BLACK and Hf Foods

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

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

Diversification Opportunities for BLACK and Hf Foods

0.27

Correlation Coefficient

BLACK  Hf Foods

Modest diversification

The 3 months correlation between BLACK and HFFG is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BLACK HILLS P and Hf Foods Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hf Foods Group and BLACK 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 BLACK HILLS P are associated (or correlated) with Hf Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hf Foods Group has no effect on the direction of BLACK i.e., BLACK and Hf Foods go up and down completely randomly.

Pair Corralation between BLACK and Hf Foods

Assuming the 90 days trading horizon BLACK HILLS P is expected to generate 0.25 times more return on investment than Hf Foods. However, BLACK HILLS P is 4.01 times less risky than Hf Foods. It trades about -0.13 of its potential returns per unit of risk. Hf Foods Group is currently generating about -0.03 per unit of risk. If you would invest  9,670  in BLACK HILLS P on October 7, 2024 and sell it today you would lose (389.00) from holding BLACK HILLS P or give up 4.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	79.37%
Values	Daily Returns

BLACK HILLS P  vs.  Hf Foods Group

BLACK HILLS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLACK HILLS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BLACK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hf Foods Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hf Foods Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Hf Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BLACK and Hf Foods

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

The idea behind BLACK HILLS P and Hf Foods Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.