Correlation Between E Home and Park Lawn

Can any of the company-specific risk be diversified away by investing in both E Home and Park Lawn 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 Park Lawn 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 Park Lawn, you can compare the effects of market volatilities on E Home and Park Lawn 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 Park Lawn. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Park Lawn.

Diversification Opportunities for E Home and Park Lawn

0.0

Correlation Coefficient

E Home  Park Lawn

Pay attention - limited upside

The 3 months correlation between EJH and Park is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service and Park Lawn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Lawn 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 Park Lawn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Lawn has no effect on the direction of E Home i.e., E Home and Park Lawn go up and down completely randomly.

Pair Corralation between E Home and Park Lawn

If you would invest  75.00  in E Home Household Service on December 1, 2024 and sell it today you would lose (20.00) from holding E Home Household Service or give up 26.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

E Home Household Service  vs.  Park Lawn

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.

Park Lawn

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Lawn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Park Lawn is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with E Home and Park Lawn

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

The idea behind E Home Household Service and Park Lawn 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.