Correlation Between HomeToGo and CAIRN HOMES

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

By analyzing existing cross correlation between HomeToGo SE and CAIRN HOMES EO, you can compare the effects of market volatilities on HomeToGo and CAIRN HOMES 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 HomeToGo with a short position of CAIRN HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and CAIRN HOMES.

Diversification Opportunities for HomeToGo and CAIRN HOMES

-0.27

Correlation Coefficient

HomeToGo  CAIRN HOMES

Very good diversification

The 3 months correlation between HomeToGo and CAIRN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and CAIRN HOMES EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAIRN HOMES EO and HomeToGo 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 HomeToGo SE are associated (or correlated) with CAIRN HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAIRN HOMES EO has no effect on the direction of HomeToGo i.e., HomeToGo and CAIRN HOMES go up and down completely randomly.

Pair Corralation between HomeToGo and CAIRN HOMES

Assuming the 90 days trading horizon HomeToGo SE is expected to generate 1.24 times more return on investment than CAIRN HOMES. However, HomeToGo is 1.24 times more volatile than CAIRN HOMES EO. It trades about 0.09 of its potential returns per unit of risk. CAIRN HOMES EO is currently generating about -0.25 per unit of risk. If you would invest  197.00  in HomeToGo SE on October 23, 2024 and sell it today you would earn a total of  8.00  from holding HomeToGo SE or generate 4.06% return on investment over 90 days.

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

HomeToGo SE  vs.  CAIRN HOMES EO

HomeToGo SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeToGo SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CAIRN HOMES EO

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CAIRN HOMES EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CAIRN HOMES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HomeToGo and CAIRN HOMES

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

The idea behind HomeToGo SE and CAIRN HOMES EO 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.