Correlation Between Homeco Daily and Scentre

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

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

Diversification Opportunities for Homeco Daily and Scentre

0.42

Correlation Coefficient

Homeco Daily  Scentre

Very weak diversification

The 3 months correlation between Homeco and Scentre is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Homeco Daily Needs and Scentre Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scentre Group and Homeco Daily 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 Homeco Daily Needs are associated (or correlated) with Scentre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scentre Group has no effect on the direction of Homeco Daily i.e., Homeco Daily and Scentre go up and down completely randomly.

Pair Corralation between Homeco Daily and Scentre

Assuming the 90 days trading horizon Homeco Daily is expected to generate 74.82 times less return on investment than Scentre. But when comparing it to its historical volatility, Homeco Daily Needs is 1.04 times less risky than Scentre. It trades about 0.0 of its potential returns per unit of risk. Scentre Group is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  347.00  in Scentre Group on September 4, 2024 and sell it today you would earn a total of  21.00  from holding Scentre Group or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Homeco Daily Needs  vs.  Scentre Group

Homeco Daily Needs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Homeco Daily Needs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Homeco Daily is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Scentre Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scentre Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Scentre may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Homeco Daily and Scentre

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

The idea behind Homeco Daily Needs and Scentre Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.