Correlation Between BGC and Hf Foods

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

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

Diversification Opportunities for BGC and Hf Foods

-0.15

Correlation Coefficient

BGC  Hf Foods

Good diversification

The 3 months correlation between BGC and HFFG is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding BGC Group 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 BGC 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 BGC Group 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 BGC i.e., BGC and Hf Foods go up and down completely randomly.

Pair Corralation between BGC and Hf Foods

Considering the 90-day investment horizon BGC Group is expected to generate 0.47 times more return on investment than Hf Foods. However, BGC Group is 2.11 times less risky than Hf Foods. It trades about -0.22 of its potential returns per unit of risk. Hf Foods Group is currently generating about -0.11 per unit of risk. If you would invest  964.00  in BGC Group on September 27, 2024 and sell it today you would lose (60.00) from holding BGC Group or give up 6.22% of portfolio value over 90 days.

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

BGC Group  vs.  Hf Foods Group

BGC Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGC Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, BGC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 BGC and Hf Foods

The main advantage of trading using opposite BGC and Hf Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGC 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 BGC Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.