Correlation Between HomeChoice Investments and Hammerson PLC

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

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

Diversification Opportunities for HomeChoice Investments and Hammerson PLC

0.13

Correlation Coefficient

HomeChoice Investments  Hammerson PLC

Average diversification

The 3 months correlation between HomeChoice and Hammerson is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding HomeChoice Investments and Hammerson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson PLC and HomeChoice Investments 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 HomeChoice Investments are associated (or correlated) with Hammerson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson PLC has no effect on the direction of HomeChoice Investments i.e., HomeChoice Investments and Hammerson PLC go up and down completely randomly.

Pair Corralation between HomeChoice Investments and Hammerson PLC

Assuming the 90 days trading horizon HomeChoice Investments is expected to generate 38.17 times less return on investment than Hammerson PLC. But when comparing it to its historical volatility, HomeChoice Investments is 27.63 times less risky than Hammerson PLC. It trades about 0.06 of its potential returns per unit of risk. Hammerson PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  64,600  in Hammerson PLC on September 14, 2024 and sell it today you would earn a total of  575,200  from holding Hammerson PLC or generate 890.4% return on investment over 90 days.

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

HomeChoice Investments  vs.  Hammerson PLC

HomeChoice Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeChoice Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hammerson PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hammerson PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Hammerson PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HomeChoice Investments and Hammerson PLC

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

The idea behind HomeChoice Investments and Hammerson PLC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.