Correlation Between Home Point and CNFinance Holdings

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

By analyzing existing cross correlation between Home Point Capital and CNFinance Holdings, you can compare the effects of market volatilities on Home Point and CNFinance Holdings 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 Point with a short position of CNFinance Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Point and CNFinance Holdings.

Diversification Opportunities for Home Point and CNFinance Holdings

0.0

Correlation Coefficient

Home Point  CNFinance Holdings

Pay attention - limited upside

The 3 months correlation between Home and CNFinance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Point Capital and CNFinance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNFinance Holdings and Home Point 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 Point Capital are associated (or correlated) with CNFinance Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNFinance Holdings has no effect on the direction of Home Point i.e., Home Point and CNFinance Holdings go up and down completely randomly.

Pair Corralation between Home Point and CNFinance Holdings

If you would invest (100.00) in Home Point Capital on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Home Point Capital or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Home Point Capital  vs.  CNFinance Holdings

Home Point Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Point Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Home Point is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

CNFinance Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNFinance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Home Point and CNFinance Holdings

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

The idea behind Home Point Capital and CNFinance Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.