Correlation Between Home Product and After You

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

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

Diversification Opportunities for Home Product and After You

-0.81

Correlation Coefficient

Home Product  After You

Pay attention - limited upside

The 3 months correlation between Home and After is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and After You Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on After You Public and Home Product 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 Product Center are associated (or correlated) with After You. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of After You Public has no effect on the direction of Home Product i.e., Home Product and After You go up and down completely randomly.

Pair Corralation between Home Product and After You

Assuming the 90 days trading horizon Home Product Center is expected to under-perform the After You. But the stock apears to be less risky and, when comparing its historical volatility, Home Product Center is 28.14 times less risky than After You. The stock trades about -0.05 of its potential returns per unit of risk. The After You Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,195  in After You Public on October 4, 2024 and sell it today you would lose (95.00) from holding After You Public or give up 7.95% of portfolio value over 90 days.

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

Home Product Center  vs.  After You Public

Home Product Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Product Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

After You Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in After You Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, After You disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Home Product and After You

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

The idea behind Home Product Center and After You Public 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 Commodity Directory module to find actively traded commodities issued by global exchanges.