Correlation Between GWILLI FOOD and HomeToGo

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

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

Diversification Opportunities for GWILLI FOOD and HomeToGo

-0.59

Correlation Coefficient

GWILLI FOOD  HomeToGo

Excellent diversification

The 3 months correlation between GWILLI and HomeToGo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding GWILLI FOOD and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE and GWILLI FOOD 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 GWILLI FOOD are associated (or correlated) with HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of GWILLI FOOD i.e., GWILLI FOOD and HomeToGo go up and down completely randomly.

Pair Corralation between GWILLI FOOD and HomeToGo

Assuming the 90 days trading horizon GWILLI FOOD is expected to under-perform the HomeToGo. But the stock apears to be less risky and, when comparing its historical volatility, GWILLI FOOD is 1.75 times less risky than HomeToGo. The stock trades about -0.15 of its potential returns per unit of risk. The HomeToGo SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  197.00  in HomeToGo SE on October 23, 2024 and sell it today you would earn a total of  8.00  from holding HomeToGo SE or generate 4.06% return on investment over 90 days.

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

GWILLI FOOD  vs.  HomeToGo SE

GWILLI FOOD

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

HomeToGo SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeToGo SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GWILLI FOOD and HomeToGo

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

The idea behind GWILLI FOOD and HomeToGo SE 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.