Correlation Between Home Bistro and Stemsation International

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

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

Diversification Opportunities for Home Bistro and Stemsation International

0.0

Correlation Coefficient

Home Bistro  Stemsation International

Pay attention - limited upside

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

Pair Corralation between Home Bistro and Stemsation International

If you would invest  2.07  in Stemsation International on December 29, 2024 and sell it today you would lose (1.27) from holding Stemsation International or give up 61.35% of portfolio value over 90 days.

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

Home Bistro  vs.  Stemsation International

Home Bistro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Bistro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Home Bistro is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Stemsation International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stemsation International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Stemsation International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Home Bistro and Stemsation International

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

The idea behind Home Bistro and Stemsation International 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.