Correlation Between Boxer Retail and HomeChoice Investments

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

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

Diversification Opportunities for Boxer Retail and HomeChoice Investments

-0.21

Correlation Coefficient

Boxer Retail  HomeChoice Investments

Very good diversification

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

Pair Corralation between Boxer Retail and HomeChoice Investments

Assuming the 90 days trading horizon Boxer Retail is expected to generate 2.18 times more return on investment than HomeChoice Investments. However, Boxer Retail is 2.18 times more volatile than HomeChoice Investments. It trades about 0.12 of its potential returns per unit of risk. HomeChoice Investments is currently generating about -0.22 per unit of risk. If you would invest  650,200  in Boxer Retail on December 10, 2024 and sell it today you would earn a total of  25,100  from holding Boxer Retail or generate 3.86% return on investment over 90 days.

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

Boxer Retail  vs.  HomeChoice Investments

Boxer Retail

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boxer Retail are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Boxer Retail is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HomeChoice Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days HomeChoice Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, HomeChoice Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Boxer Retail and HomeChoice Investments

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

The idea behind Boxer Retail and HomeChoice Investments 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.