Correlation Between Home Pottery and Index International

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

By analyzing existing cross correlation between Home Pottery Public and Index International Group, you can compare the effects of market volatilities on Home Pottery and Index International 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 Pottery with a short position of Index International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Pottery and Index International.

Diversification Opportunities for Home Pottery and Index International

0.35

Correlation Coefficient

Home Pottery  Index International

Weak diversification

The 3 months correlation between Home and Index is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Home Pottery Public and Index International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Index International and Home Pottery 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 Pottery Public are associated (or correlated) with Index International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Index International has no effect on the direction of Home Pottery i.e., Home Pottery and Index International go up and down completely randomly.

Pair Corralation between Home Pottery and Index International

Assuming the 90 days trading horizon Home Pottery is expected to generate 6.32 times less return on investment than Index International. In addition to that, Home Pottery is 1.02 times more volatile than Index International Group. It trades about 0.01 of its total potential returns per unit of risk. Index International Group is currently generating about 0.07 per unit of volatility. If you would invest  81.00  in Index International Group on September 18, 2024 and sell it today you would earn a total of  2.00  from holding Index International Group or generate 2.47% return on investment over 90 days.

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

Home Pottery Public  vs.  Index International Group

Home Pottery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Pottery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Home Pottery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Index International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Index International Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Index International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Home Pottery and Index International

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

The idea behind Home Pottery Public and Index International Group 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.