Correlation Between Collins Foods and Home Consortium

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

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

Diversification Opportunities for Collins Foods and Home Consortium

-0.22

Correlation Coefficient

Collins Foods  Home Consortium

Very good diversification

The 3 months correlation between Collins and Home is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium and Collins Foods 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 Collins Foods are associated (or correlated) with Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of Collins Foods i.e., Collins Foods and Home Consortium go up and down completely randomly.

Pair Corralation between Collins Foods and Home Consortium

Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Home Consortium. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 1.8 times less risky than Home Consortium. The stock trades about -0.05 of its potential returns per unit of risk. The Home Consortium is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  809.00  in Home Consortium on September 14, 2024 and sell it today you would earn a total of  406.00  from holding Home Consortium or generate 50.19% return on investment over 90 days.

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

Collins Foods  vs.  Home Consortium

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Collins Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Home Consortium

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Home Consortium are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Home Consortium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collins Foods and Home Consortium

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

The idea behind Collins Foods and Home Consortium 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.