Correlation Between Halfords Group and San Fu

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

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

Diversification Opportunities for Halfords Group and San Fu

-0.03

Correlation Coefficient

Halfords Group  San Fu

Good diversification

The 3 months correlation between Halfords and San is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Halfords Group PLC and San Fu Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fu Chemical and Halfords Group 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 Halfords Group PLC are associated (or correlated) with San Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fu Chemical has no effect on the direction of Halfords Group i.e., Halfords Group and San Fu go up and down completely randomly.

Pair Corralation between Halfords Group and San Fu

Assuming the 90 days horizon Halfords Group is expected to generate 5.95 times less return on investment than San Fu. In addition to that, Halfords Group is 1.46 times more volatile than San Fu Chemical. It trades about 0.01 of its total potential returns per unit of risk. San Fu Chemical is currently generating about 0.06 per unit of volatility. If you would invest  12,300  in San Fu Chemical on September 4, 2024 and sell it today you would earn a total of  950.00  from holding San Fu Chemical or generate 7.72% return on investment over 90 days.

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

Halfords Group PLC  vs.  San Fu Chemical

Halfords Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halfords Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Halfords Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

San Fu Chemical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in San Fu Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, San Fu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Halfords Group and San Fu

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

The idea behind Halfords Group PLC and San Fu Chemical 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..