Correlation Between Arteche Lantegi and Home Capital

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

By analyzing existing cross correlation between Arteche Lantegi Elkartea and Home Capital Rentals, you can compare the effects of market volatilities on Arteche Lantegi and Home Capital 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 Arteche Lantegi with a short position of Home Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arteche Lantegi and Home Capital.

Diversification Opportunities for Arteche Lantegi and Home Capital

-0.66

Correlation Coefficient

Arteche Lantegi  Home Capital

Excellent diversification

The 3 months correlation between Arteche and Home is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Arteche Lantegi Elkartea and Home Capital Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Capital Rentals and Arteche Lantegi 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 Arteche Lantegi Elkartea are associated (or correlated) with Home Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Capital Rentals has no effect on the direction of Arteche Lantegi i.e., Arteche Lantegi and Home Capital go up and down completely randomly.

Pair Corralation between Arteche Lantegi and Home Capital

Assuming the 90 days trading horizon Arteche Lantegi Elkartea is expected to generate 2.73 times more return on investment than Home Capital. However, Arteche Lantegi is 2.73 times more volatile than Home Capital Rentals. It trades about 0.11 of its potential returns per unit of risk. Home Capital Rentals is currently generating about -0.13 per unit of risk. If you would invest  650.00  in Arteche Lantegi Elkartea on December 2, 2024 and sell it today you would earn a total of  110.00  from holding Arteche Lantegi Elkartea or generate 16.92% return on investment over 90 days.

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

Arteche Lantegi Elkartea  vs.  Home Capital Rentals

Arteche Lantegi Elkartea

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arteche Lantegi Elkartea are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Arteche Lantegi exhibited solid returns over the last few months and may actually be approaching a breakup point.

Home Capital Rentals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Capital Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Arteche Lantegi and Home Capital

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

The idea behind Arteche Lantegi Elkartea and Home Capital Rentals 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.