Correlation Between Hurco Companies and Tyson Foods

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

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

Diversification Opportunities for Hurco Companies and Tyson Foods

-0.89

Correlation Coefficient

Hurco Companies  Tyson Foods

Pay attention - limited upside

The 3 months correlation between Hurco and Tyson is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Hurco Companies 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 Hurco Companies are associated (or correlated) with Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Hurco Companies i.e., Hurco Companies and Tyson Foods go up and down completely randomly.

Pair Corralation between Hurco Companies and Tyson Foods

Given the investment horizon of 90 days Hurco Companies is expected to under-perform the Tyson Foods. But the stock apears to be less risky and, when comparing its historical volatility, Hurco Companies is 1.46 times less risky than Tyson Foods. The stock trades about -0.1 of its potential returns per unit of risk. The Tyson Foods is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  5,909  in Tyson Foods on February 6, 2024 and sell it today you would lose (164.00) from holding Tyson Foods or give up 2.78% of portfolio value over 90 days.

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

Hurco Companies  vs.  Tyson Foods

Hurco Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurco Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Tyson Foods

Risk-Adjusted Performance

4 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hurco Companies and Tyson Foods

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

The idea behind Hurco Companies and Tyson Foods 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.