Correlation Between Home Depot and Uxin

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

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

Diversification Opportunities for Home Depot and Uxin

0.43

Correlation Coefficient

Home Depot  Uxin

Very weak diversification

The 3 months correlation between Home and Uxin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Uxin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uxin and Home Depot 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 Depot are associated (or correlated) with Uxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uxin has no effect on the direction of Home Depot i.e., Home Depot and Uxin go up and down completely randomly.

Pair Corralation between Home Depot and Uxin

Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the Uxin. But the stock apears to be less risky and, when comparing its historical volatility, Home Depot is 3.03 times less risky than Uxin. The stock trades about -0.08 of its potential returns per unit of risk. The Uxin is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  446.00  in Uxin on December 26, 2024 and sell it today you would lose (37.00) from holding Uxin or give up 8.3% of portfolio value over 90 days.

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

Home Depot  vs.  Uxin

Home Depot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Uxin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Uxin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Uxin is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Home Depot and Uxin

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

The idea behind Home Depot and Uxin 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.