Correlation Between Can Fin and Home First

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

By analyzing existing cross correlation between Can Fin Homes and Home First Finance, you can compare the effects of market volatilities on Can Fin and Home First 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 Can Fin with a short position of Home First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Can Fin and Home First.

Diversification Opportunities for Can Fin and Home First

0.68

Correlation Coefficient

Can Fin  Home First

Poor diversification

The 3 months correlation between Can and Home is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Can Fin Homes and Home First Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home First Finance and Can Fin 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 Can Fin Homes are associated (or correlated) with Home First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home First Finance has no effect on the direction of Can Fin i.e., Can Fin and Home First go up and down completely randomly.

Pair Corralation between Can Fin and Home First

Assuming the 90 days trading horizon Can Fin Homes is expected to generate 0.68 times more return on investment than Home First. However, Can Fin Homes is 1.47 times less risky than Home First. It trades about -0.1 of its potential returns per unit of risk. Home First Finance is currently generating about -0.14 per unit of risk. If you would invest  86,370  in Can Fin Homes on September 20, 2024 and sell it today you would lose (9,075) from holding Can Fin Homes or give up 10.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Can Fin Homes  vs.  Home First Finance

Can Fin Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Can Fin Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Home First Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home First Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Can Fin and Home First

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

The idea behind Can Fin Homes and Home First Finance 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.