Correlation Between REMEDY ENTERTAINMENT and M/I Homes

Can any of the company-specific risk be diversified away by investing in both REMEDY ENTERTAINMENT and M/I Homes 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 REMEDY ENTERTAINMENT and M/I Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between REMEDY ENTERTAINMENT OYJ and MI Homes, you can compare the effects of market volatilities on REMEDY ENTERTAINMENT and M/I Homes 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 REMEDY ENTERTAINMENT with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of REMEDY ENTERTAINMENT and M/I Homes.

Diversification Opportunities for REMEDY ENTERTAINMENT and M/I Homes

0.26

Correlation Coefficient

REMEDY ENTERTAINMENT  M/I Homes

Modest diversification

The 3 months correlation between REMEDY and M/I is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding REMEDY ENTERTAINMENT OYJ and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT OYJ are associated (or correlated) with M/I Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M/I Homes has no effect on the direction of REMEDY ENTERTAINMENT i.e., REMEDY ENTERTAINMENT and M/I Homes go up and down completely randomly.

Pair Corralation between REMEDY ENTERTAINMENT and M/I Homes

Assuming the 90 days horizon REMEDY ENTERTAINMENT OYJ is expected to under-perform the M/I Homes. In addition to that, REMEDY ENTERTAINMENT is 1.12 times more volatile than MI Homes. It trades about -0.02 of its total potential returns per unit of risk. MI Homes is currently generating about 0.09 per unit of volatility. If you would invest  5,500  in MI Homes on October 24, 2024 and sell it today you would earn a total of  7,715  from holding MI Homes or generate 140.27% return on investment over 90 days.

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

REMEDY ENTERTAINMENT OYJ  vs.  MI Homes

REMEDY ENTERTAINMENT OYJ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REMEDY ENTERTAINMENT OYJ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

M/I Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic 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 REMEDY ENTERTAINMENT and M/I Homes

The main advantage of trading using opposite REMEDY ENTERTAINMENT and M/I Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REMEDY ENTERTAINMENT position performs unexpectedly, M/I Homes 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 M/I Homes will offset losses from the drop in M/I Homes' long position.

The idea behind REMEDY ENTERTAINMENT OYJ and MI Homes 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.