Correlation Between House Of and Converge Information

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

By analyzing existing cross correlation between House of Investments and Converge Information Communications, you can compare the effects of market volatilities on House Of and Converge Information 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 House Of with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of House Of and Converge Information.

Diversification Opportunities for House Of and Converge Information

-0.07

Correlation Coefficient

House Of  Converge Information

Good diversification

The 3 months correlation between House and Converge is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding House of Investments and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and House Of 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 House of Investments are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of House Of i.e., House Of and Converge Information go up and down completely randomly.

Pair Corralation between House Of and Converge Information

Assuming the 90 days trading horizon House Of is expected to generate 3.51 times less return on investment than Converge Information. In addition to that, House Of is 1.29 times more volatile than Converge Information Communications. It trades about 0.02 of its total potential returns per unit of risk. Converge Information Communications is currently generating about 0.11 per unit of volatility. If you would invest  1,614  in Converge Information Communications on December 29, 2024 and sell it today you would earn a total of  284.00  from holding Converge Information Communications or generate 17.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.18%
Values	Daily Returns

House of Investments  vs.  Converge Information Communica

House of Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in House of Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, House Of is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Converge Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Information Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Converge Information reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with House Of and Converge Information

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

The idea behind House of Investments and Converge Information Communications 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.