Correlation Between Cairn Homes and Team Internet

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

By analyzing existing cross correlation between Cairn Homes PLC and Team Internet Group, you can compare the effects of market volatilities on Cairn Homes and Team Internet 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 Cairn Homes with a short position of Team Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Team Internet.

Diversification Opportunities for Cairn Homes and Team Internet

0.66

Correlation Coefficient

Cairn Homes  Team Internet

Poor diversification

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

Pair Corralation between Cairn Homes and Team Internet

Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.22 times more return on investment than Team Internet. However, Cairn Homes PLC is 4.52 times less risky than Team Internet. It trades about -0.14 of its potential returns per unit of risk. Team Internet Group is currently generating about -0.04 per unit of risk. If you would invest  19,160  in Cairn Homes PLC on December 30, 2024 and sell it today you would lose (2,840) from holding Cairn Homes PLC or give up 14.82% of portfolio value over 90 days.

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

Cairn Homes PLC  vs.  Team Internet Group

Cairn Homes PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cairn Homes PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Team Internet Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Team Internet Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cairn Homes and Team Internet

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

The idea behind Cairn Homes PLC and Team Internet Group 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 CEOs Directory module to screen CEOs from public companies around the world.