Correlation Between Hf Foods and Chefs Warehouse

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

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

Diversification Opportunities for Hf Foods and Chefs Warehouse

-0.55

Correlation Coefficient

Hf Foods  Chefs Warehouse

Excellent diversification

The 3 months correlation between HFFG and Chefs is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group and The Chefs Warehouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chefs Warehouse and Hf 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 Hf Foods Group are associated (or correlated) with Chefs Warehouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chefs Warehouse has no effect on the direction of Hf Foods i.e., Hf Foods and Chefs Warehouse go up and down completely randomly.

Pair Corralation between Hf Foods and Chefs Warehouse

Given the investment horizon of 90 days Hf Foods Group is expected to under-perform the Chefs Warehouse. In addition to that, Hf Foods is 1.32 times more volatile than The Chefs Warehouse. It trades about -0.35 of its total potential returns per unit of risk. The Chefs Warehouse is currently generating about -0.22 per unit of volatility. If you would invest  3,646  in The Chefs Warehouse on January 26, 2024 and sell it today you would lose (329.00) from holding The Chefs Warehouse or give up 9.02% of portfolio value over 90 days.

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

Hf Foods Group  vs.  The Chefs Warehouse

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 inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chefs Warehouse

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Chefs Warehouse are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Chefs Warehouse is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hf Foods and Chefs Warehouse

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

The idea behind Hf Foods Group and The Chefs Warehouse 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.