Correlation Between Granprade and HomeChoice Investments

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Can any of the company-specific risk be diversified away by investing in both Granprade and HomeChoice Investments 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 Granprade and HomeChoice Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granprade and HomeChoice Investments, you can compare the effects of market volatilities on Granprade and HomeChoice Investments 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 Granprade with a short position of HomeChoice Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granprade and HomeChoice Investments.

Diversification Opportunities for Granprade and HomeChoice Investments

GranpradeHomeChoiceDiversified AwayGranpradeHomeChoiceDiversified Away100%
0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Granprade and HomeChoice is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Granprade and HomeChoice Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeChoice Investments and Granprade 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 Granprade are associated (or correlated) with HomeChoice Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeChoice Investments has no effect on the direction of Granprade i.e., Granprade and HomeChoice Investments go up and down completely randomly.

Pair Corralation between Granprade and HomeChoice Investments

Assuming the 90 days trading horizon Granprade is expected to generate 0.6 times more return on investment than HomeChoice Investments. However, Granprade is 1.67 times less risky than HomeChoice Investments. It trades about -0.06 of its potential returns per unit of risk. HomeChoice Investments is currently generating about -0.11 per unit of risk. If you would invest  37,000  in Granprade on October 21, 2024 and sell it today you would lose (3,000) from holding Granprade or give up 8.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.39%
ValuesDaily Returns

Granprade  vs.  HomeChoice Investments

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -25-20-15-10-5
JavaScript chart by amCharts 3.21.15GPL HIL
       Timeline  
Granprade 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Granprade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan300310320330340350360370
HomeChoice Investments 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HomeChoice Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2,8003,0003,2003,4003,6003,800

Granprade and HomeChoice Investments Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.19-2.4-1.62-0.84-0.05310.691.432.172.913.65 0.040.050.060.070.080.090.100.11
JavaScript chart by amCharts 3.21.15GPL HIL
       Returns  

Pair Trading with Granprade and HomeChoice Investments

The main advantage of trading using opposite Granprade and HomeChoice Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granprade position performs unexpectedly, HomeChoice Investments 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 HomeChoice Investments will offset losses from the drop in HomeChoice Investments' long position.
The idea behind Granprade and HomeChoice Investments 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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