Correlation Between Care Property and Home Invest

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

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

Diversification Opportunities for Care Property and Home Invest

0.08

Correlation Coefficient

Care Property  Home Invest

Significant diversification

The 3 months correlation between Care and Home is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Care Property Invest and Home Invest Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Invest Belgium and Care Property 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 Care Property Invest are associated (or correlated) with Home Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Invest Belgium has no effect on the direction of Care Property i.e., Care Property and Home Invest go up and down completely randomly.

Pair Corralation between Care Property and Home Invest

Assuming the 90 days trading horizon Care Property Invest is expected to generate 1.07 times more return on investment than Home Invest. However, Care Property is 1.07 times more volatile than Home Invest Belgium. It trades about 0.08 of its potential returns per unit of risk. Home Invest Belgium is currently generating about 0.08 per unit of risk. If you would invest  1,130  in Care Property Invest on December 30, 2024 and sell it today you would earn a total of  82.00  from holding Care Property Invest or generate 7.26% return on investment over 90 days.

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

Care Property Invest  vs.  Home Invest Belgium

Care Property Invest

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Care Property Invest are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Care Property may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Home Invest Belgium

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Home Invest Belgium are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Home Invest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Care Property and Home Invest

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

The idea behind Care Property Invest and Home Invest Belgium 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.