Correlation Between HVA Foods and Citrus Leisure

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

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

Diversification Opportunities for HVA Foods and Citrus Leisure

0.0

Correlation Coefficient

HVA Foods  Citrus Leisure

Pay attention - limited upside

The 3 months correlation between HVA and Citrus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HVA Foods PLC and Citrus Leisure PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citrus Leisure PLC and HVA Foods 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 HVA Foods PLC are associated (or correlated) with Citrus Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citrus Leisure PLC has no effect on the direction of HVA Foods i.e., HVA Foods and Citrus Leisure go up and down completely randomly.

Pair Corralation between HVA Foods and Citrus Leisure

Assuming the 90 days trading horizon HVA Foods PLC is expected to generate 1.58 times more return on investment than Citrus Leisure. However, HVA Foods is 1.58 times more volatile than Citrus Leisure PLC. It trades about 0.1 of its potential returns per unit of risk. Citrus Leisure PLC is currently generating about 0.01 per unit of risk. If you would invest  310.00  in HVA Foods PLC on September 15, 2024 and sell it today you would earn a total of  80.00  from holding HVA Foods PLC or generate 25.81% return on investment over 90 days.

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

HVA Foods PLC  vs.  Citrus Leisure PLC

HVA Foods PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HVA Foods PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HVA Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Citrus Leisure PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citrus Leisure PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Citrus Leisure is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HVA Foods and Citrus Leisure

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

The idea behind HVA Foods PLC and Citrus Leisure PLC 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.