Correlation Between Home First and Sukhjit Starch

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

Diversification Opportunities for Home First and Sukhjit Starch

0.28

Correlation Coefficient

Home First  Sukhjit Starch

Modest diversification

The 3 months correlation between Home and Sukhjit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Home First Finance and Sukhjit Starch Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sukhjit Starch Chemicals 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 Sukhjit Starch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sukhjit Starch Chemicals has no effect on the direction of Home First i.e., Home First and Sukhjit Starch go up and down completely randomly.

Pair Corralation between Home First and Sukhjit Starch

Assuming the 90 days trading horizon Home First Finance is expected to under-perform the Sukhjit Starch. In addition to that, Home First is 1.14 times more volatile than Sukhjit Starch Chemicals. It trades about -0.02 of its total potential returns per unit of risk. Sukhjit Starch Chemicals is currently generating about 0.05 per unit of volatility. If you would invest  25,515  in Sukhjit Starch Chemicals on September 3, 2024 and sell it today you would earn a total of  1,353  from holding Sukhjit Starch Chemicals or generate 5.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Home First Finance  vs.  Sukhjit Starch Chemicals

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 relatively invariable basic indicators, Home First is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Sukhjit Starch Chemicals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sukhjit Starch Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Sukhjit Starch may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Home First and Sukhjit Starch

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

The idea behind Home First Finance and Sukhjit Starch Chemicals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.