Correlation Between Home First and Metalyst Forgings

Can any of the company-specific risk be diversified away by investing in both Home First and Metalyst Forgings 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 Metalyst Forgings 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 Metalyst Forgings Limited, you can compare the effects of market volatilities on Home First and Metalyst Forgings 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 Metalyst Forgings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home First and Metalyst Forgings.

Diversification Opportunities for Home First and Metalyst Forgings

0.0

Correlation Coefficient

Home First  Metalyst Forgings

Pay attention - limited upside

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

Pair Corralation between Home First and Metalyst Forgings

Assuming the 90 days trading horizon Home First is expected to generate 1.0 times less return on investment than Metalyst Forgings. In addition to that, Home First is 1.24 times more volatile than Metalyst Forgings Limited. It trades about 0.02 of its total potential returns per unit of risk. Metalyst Forgings Limited is currently generating about 0.03 per unit of volatility. If you would invest  365.00  in Metalyst Forgings Limited on September 24, 2024 and sell it today you would earn a total of  40.00  from holding Metalyst Forgings Limited or generate 10.96% return on investment over 90 days.

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

Home First Finance  vs.  Metalyst Forgings Limited

Home First Finance

Risk-Adjusted Performance

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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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Metalyst Forgings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalyst Forgings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Metalyst Forgings is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Home First and Metalyst Forgings

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

The idea behind Home First Finance and Metalyst Forgings Limited 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.