Correlation Between Peraso and Home Federal

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

By analyzing existing cross correlation between Peraso Inc and Home Federal Bancorp, you can compare the effects of market volatilities on Peraso and Home Federal 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 Peraso with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peraso and Home Federal.

Diversification Opportunities for Peraso and Home Federal

-0.25

Correlation Coefficient

Peraso  Home Federal

Very good diversification

The 3 months correlation between Peraso and Home is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Peraso Inc and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal Bancorp and Peraso 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 Peraso Inc are associated (or correlated) with Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of Peraso i.e., Peraso and Home Federal go up and down completely randomly.

Pair Corralation between Peraso and Home Federal

Given the investment horizon of 90 days Peraso Inc is expected to generate 3.22 times more return on investment than Home Federal. However, Peraso is 3.22 times more volatile than Home Federal Bancorp. It trades about 0.03 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about -0.01 per unit of risk. If you would invest  87.00  in Peraso Inc on December 20, 2024 and sell it today you would lose (4.00) from holding Peraso Inc or give up 4.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.33%
Values	Daily Returns

Peraso Inc  vs.  Home Federal Bancorp

Peraso Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Peraso Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Peraso displayed solid returns over the last few months and may actually be approaching a breakup point.

Home Federal Bancorp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Peraso and Home Federal

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

The idea behind Peraso Inc and Home Federal Bancorp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.