Correlation Between AOYAMA TRADING and HomeToGo

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

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

Diversification Opportunities for AOYAMA TRADING and HomeToGo

0.21

Correlation Coefficient

AOYAMA TRADING  HomeToGo

Modest diversification

The 3 months correlation between AOYAMA and HomeToGo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and HomeToGo go up and down completely randomly.

Pair Corralation between AOYAMA TRADING and HomeToGo

Assuming the 90 days horizon AOYAMA TRADING is expected to generate 0.47 times more return on investment than HomeToGo. However, AOYAMA TRADING is 2.15 times less risky than HomeToGo. It trades about -0.08 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.06 per unit of risk. If you would invest  1,390  in AOYAMA TRADING on December 24, 2024 and sell it today you would lose (80.00) from holding AOYAMA TRADING or give up 5.76% of portfolio value over 90 days.

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

AOYAMA TRADING  vs.  HomeToGo SE

AOYAMA TRADING

Risk-Adjusted Performance

Very Weak

Over the last 90 days AOYAMA TRADING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AOYAMA TRADING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HomeToGo SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days HomeToGo SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AOYAMA TRADING and HomeToGo

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

The idea behind AOYAMA TRADING and HomeToGo SE 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.