Correlation Between Calavo Growers and Hf Foods

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

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

Diversification Opportunities for Calavo Growers and Hf Foods

0.2

Correlation Coefficient

Calavo Growers  Hf Foods

Modest diversification

The 3 months correlation between Calavo and HFFG is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers 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 Calavo Growers 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 Calavo Growers 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 Calavo Growers i.e., Calavo Growers and Hf Foods go up and down completely randomly.

Pair Corralation between Calavo Growers and Hf Foods

Given the investment horizon of 90 days Calavo Growers is expected to under-perform the Hf Foods. But the stock apears to be less risky and, when comparing its historical volatility, Calavo Growers is 1.51 times less risky than Hf Foods. The stock trades about -0.02 of its potential returns per unit of risk. The Hf Foods Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  304.00  in Hf Foods Group on February 29, 2024 and sell it today you would earn a total of  27.00  from holding Hf Foods Group or generate 8.88% return on investment over 90 days.

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

Calavo Growers  vs.  Hf Foods Group

Calavo Growers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calavo Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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 latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Calavo Growers and Hf Foods

The main advantage of trading using opposite Calavo Growers and Hf Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calavo Growers 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 Calavo Growers 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.