Correlation Between HomeToGo and Pick N

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

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

Diversification Opportunities for HomeToGo and Pick N

0.75

Correlation Coefficient

HomeToGo  Pick N

Poor diversification

The 3 months correlation between HomeToGo and Pick is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of HomeToGo i.e., HomeToGo and Pick N go up and down completely randomly.

Pair Corralation between HomeToGo and Pick N

Assuming the 90 days trading horizon HomeToGo SE is expected to generate 0.99 times more return on investment than Pick N. However, HomeToGo SE is 1.01 times less risky than Pick N. It trades about -0.05 of its potential returns per unit of risk. Pick n Pay is currently generating about -0.07 per unit of risk. If you would invest  199.00  in HomeToGo SE on December 31, 2024 and sell it today you would lose (17.00) from holding HomeToGo SE or give up 8.54% of portfolio value over 90 days.

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

HomeToGo SE  vs.  Pick n Pay

HomeToGo SE

Risk-Adjusted Performance

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.

Pick n Pay

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pick n Pay 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 Pick N

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

The idea behind HomeToGo SE and Pick n Pay 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.