Correlation Between House Of and COL Financial

Can any of the company-specific risk be diversified away by investing in both House Of and COL Financial 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 COL Financial 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 COL Financial Group, you can compare the effects of market volatilities on House Of and COL Financial 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 COL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of House Of and COL Financial.

Diversification Opportunities for House Of and COL Financial

0.4

Correlation Coefficient

House Of  COL Financial

Very weak diversification

The 3 months correlation between House and COL is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding House of Investments and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial Group 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 COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of House Of i.e., House Of and COL Financial go up and down completely randomly.

Pair Corralation between House Of and COL Financial

Assuming the 90 days trading horizon House of Investments is expected to generate 1.67 times more return on investment than COL Financial. However, House Of is 1.67 times more volatile than COL Financial Group. It trades about 0.02 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.03 per unit of risk. If you would invest  342.00  in House of Investments on December 28, 2024 and sell it today you would earn a total of  3.00  from holding House of Investments or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	52.63%
Values	Daily Returns

House of Investments  vs.  COL Financial Group

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.

COL Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days COL Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, COL Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with House Of and COL Financial

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

The idea behind House of Investments and COL Financial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.