Correlation Between Home First and Teamlease Services

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

Diversification Opportunities for Home First and Teamlease Services

0.4

Correlation Coefficient

Home First  Teamlease Services

Very weak diversification

The 3 months correlation between Home and Teamlease is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Home First Finance and Teamlease Services Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teamlease Services 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 Teamlease Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teamlease Services has no effect on the direction of Home First i.e., Home First and Teamlease Services go up and down completely randomly.

Pair Corralation between Home First and Teamlease Services

Assuming the 90 days trading horizon Home First Finance is expected to under-perform the Teamlease Services. In addition to that, Home First is 1.26 times more volatile than Teamlease Services Limited. It trades about -0.1 of its total potential returns per unit of risk. Teamlease Services Limited is currently generating about 0.04 per unit of volatility. If you would invest  294,355  in Teamlease Services Limited on October 6, 2024 and sell it today you would earn a total of  10,750  from holding Teamlease Services Limited or generate 3.65% return on investment over 90 days.

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

Home First Finance  vs.  Teamlease Services Limited

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 unfluctuating 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.

Teamlease Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teamlease Services Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Teamlease Services is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home First and Teamlease Services

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

The idea behind Home First Finance and Teamlease Services 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.