Correlation Between Hilton Food and Beeks Trading

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

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

Diversification Opportunities for Hilton Food and Beeks Trading

0.22

Correlation Coefficient

Hilton Food  Beeks Trading

Modest diversification

The 3 months correlation between Hilton and Beeks is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Beeks Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beeks Trading and Hilton 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 Hilton Food Group are associated (or correlated) with Beeks Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beeks Trading has no effect on the direction of Hilton Food i.e., Hilton Food and Beeks Trading go up and down completely randomly.

Pair Corralation between Hilton Food and Beeks Trading

Assuming the 90 days trading horizon Hilton Food is expected to generate 8.79 times less return on investment than Beeks Trading. But when comparing it to its historical volatility, Hilton Food Group is 2.3 times less risky than Beeks Trading. It trades about 0.03 of its potential returns per unit of risk. Beeks Trading is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  25,200  in Beeks Trading on September 14, 2024 and sell it today you would earn a total of  4,400  from holding Beeks Trading or generate 17.46% return on investment over 90 days.

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

Hilton Food Group  vs.  Beeks Trading

Hilton Food Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Food Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Hilton Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Beeks Trading

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beeks Trading are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Beeks Trading exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hilton Food and Beeks Trading

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

The idea behind Hilton Food Group and Beeks Trading 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.