Correlation Between Aurora Acquisition and Hf Foods

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

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

Diversification Opportunities for Aurora Acquisition and Hf Foods

0.68

Correlation Coefficient

Aurora Acquisition  Hf Foods

Poor diversification

The 3 months correlation between Aurora and HFFG is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Acquisition Corp 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 Aurora Acquisition 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 Aurora Acquisition Corp 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 Aurora Acquisition i.e., Aurora Acquisition and Hf Foods go up and down completely randomly.

Pair Corralation between Aurora Acquisition and Hf Foods

Assuming the 90 days horizon Aurora Acquisition is expected to generate 1.2 times less return on investment than Hf Foods. But when comparing it to its historical volatility, Aurora Acquisition Corp is 4.86 times less risky than Hf Foods. It trades about 0.07 of its potential returns per unit of risk. Hf Foods Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  387.00  in Hf Foods Group on September 14, 2024 and sell it today you would lose (11.00) from holding Hf Foods Group or give up 2.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.89%
Values	Daily Returns

Aurora Acquisition Corp  vs.  Hf Foods Group

Aurora Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hf Foods Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hf Foods Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Hf Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Acquisition and Hf Foods

The main advantage of trading using opposite Aurora Acquisition and Hf Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Acquisition 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 Aurora Acquisition Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.