Correlation Between E Home and Flanigans Enterprises

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

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

Diversification Opportunities for E Home and Flanigans Enterprises

0.08

Correlation Coefficient

E Home  Flanigans Enterprises

Significant diversification

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

Pair Corralation between E Home and Flanigans Enterprises

Considering the 90-day investment horizon E Home Household Service is expected to under-perform the Flanigans Enterprises. But the stock apears to be less risky and, when comparing its historical volatility, E Home Household Service is 4.64 times less risky than Flanigans Enterprises. The stock trades about -0.04 of its potential returns per unit of risk. The Flanigans Enterprises is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,797  in Flanigans Enterprises on December 3, 2024 and sell it today you would lose (297.00) from holding Flanigans Enterprises or give up 10.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.6%
Values	Daily Returns

E Home Household Service  vs.  Flanigans Enterprises

E Home Household

Risk-Adjusted Performance

Very Weak

Over the last 90 days E Home Household Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, E Home is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Flanigans Enterprises

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flanigans Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with E Home and Flanigans Enterprises

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

The idea behind E Home Household Service and Flanigans Enterprises 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.