Correlation Between Home First and Edelweiss Financial

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

By analyzing existing cross correlation between Home First Finance and Edelweiss Financial Services, you can compare the effects of market volatilities on Home First and Edelweiss 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 Home First with a short position of Edelweiss Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home First and Edelweiss Financial.

Diversification Opportunities for Home First and Edelweiss Financial

-0.22

Correlation Coefficient

Home First  Edelweiss Financial

Very good diversification

The 3 months correlation between Home and Edelweiss is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Home First Finance and Edelweiss Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edelweiss Financial and Home First 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 First Finance are associated (or correlated) with Edelweiss Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edelweiss Financial has no effect on the direction of Home First i.e., Home First and Edelweiss Financial go up and down completely randomly.

Pair Corralation between Home First and Edelweiss Financial

Assuming the 90 days trading horizon Home First Finance is expected to generate 0.55 times more return on investment than Edelweiss Financial. However, Home First Finance is 1.81 times less risky than Edelweiss Financial. It trades about 0.0 of its potential returns per unit of risk. Edelweiss Financial Services is currently generating about -0.16 per unit of risk. If you would invest  104,010  in Home First Finance on October 13, 2024 and sell it today you would lose (340.00) from holding Home First Finance or give up 0.33% of portfolio value over 90 days.

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

Home First Finance  vs.  Edelweiss Financial Services

Home First Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home First Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Edelweiss Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edelweiss Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Home First and Edelweiss Financial

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

The idea behind Home First Finance and Edelweiss Financial Services 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.