Correlation Between HomeToGo and Kurita Water

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

By analyzing existing cross correlation between HomeToGo SE and Kurita Water Industries, you can compare the effects of market volatilities on HomeToGo and Kurita Water 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 Kurita Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and Kurita Water.

Diversification Opportunities for HomeToGo and Kurita Water

-0.34

Correlation Coefficient

HomeToGo  Kurita Water

Very good diversification

The 3 months correlation between HomeToGo and Kurita is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and Kurita Water Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kurita Water Industries 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 Kurita Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kurita Water Industries has no effect on the direction of HomeToGo i.e., HomeToGo and Kurita Water go up and down completely randomly.

Pair Corralation between HomeToGo and Kurita Water

Assuming the 90 days trading horizon HomeToGo SE is expected to under-perform the Kurita Water. In addition to that, HomeToGo is 2.57 times more volatile than Kurita Water Industries. It trades about -0.13 of its total potential returns per unit of risk. Kurita Water Industries is currently generating about -0.27 per unit of volatility. If you would invest  3,732  in Kurita Water Industries on October 6, 2024 and sell it today you would lose (272.00) from holding Kurita Water Industries or give up 7.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

HomeToGo SE  vs.  Kurita Water Industries

HomeToGo SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeToGo SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, HomeToGo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kurita Water Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kurita Water Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HomeToGo and Kurita Water

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

The idea behind HomeToGo SE and Kurita Water Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..