Correlation Between Hershey Foods and ATA Creativity

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Can any of the company-specific risk be diversified away by investing in both Hershey Foods and ATA Creativity 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 Hershey Foods and ATA Creativity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hershey Foods Corp and ATA Creativity Global, you can compare the effects of market volatilities on Hershey Foods and ATA Creativity 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 Hershey Foods with a short position of ATA Creativity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hershey Foods and ATA Creativity.

Diversification Opportunities for Hershey Foods and ATA Creativity

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Hershey and ATA Creativity is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hershey Foods Corp and ATA Creativity Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATA Creativity Global and Hershey 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 Hershey Foods Corp are associated (or correlated) with ATA Creativity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATA Creativity Global has no effect on the direction of Hershey Foods i.e., Hershey Foods and ATA Creativity go up and down completely randomly.

Pair Corralation between Hershey Foods and ATA Creativity

Considering the 90-day investment horizon Hershey Foods Corp is expected to generate 0.49 times more return on investment than ATA Creativity. However, Hershey Foods Corp is 2.02 times less risky than ATA Creativity. It trades about -0.07 of its potential returns per unit of risk. ATA Creativity Global is currently generating about -0.06 per unit of risk. If you would invest  22,128  in Hershey Foods Corp on February 26, 2022 and sell it today you would lose (867.00)  from holding Hershey Foods Corp or give up 3.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hershey Foods Corp  vs.  ATA Creativity Global

 Performance (%) 
      Timeline 
Hershey Foods Corp 
Hershey Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hershey Foods Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Hershey Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Hershey Price Channel

ATA Creativity Global 
ATA Creativity Performance
0 of 100
Over the last 90 days ATA Creativity Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in June 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ATA Creativity Price Channel

Hershey Foods and ATA Creativity Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Hershey Foods and ATA Creativity

The main advantage of trading using opposite Hershey Foods and ATA Creativity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hershey Foods position performs unexpectedly, ATA Creativity 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 ATA Creativity will offset losses from the drop in ATA Creativity's long position.
The idea behind Hershey Foods Corp and ATA Creativity Global 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.

ATA Creativity Global

Pair trading matchups for ATA Creativity

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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