Correlation Between Stemsation International and Home Bistro

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

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

Diversification Opportunities for Stemsation International and Home Bistro

0.0

Correlation Coefficient

Stemsation International  Home Bistro

Pay attention - limited upside

The 3 months correlation between Stemsation and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stemsation International and Home Bistro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bistro and Stemsation International 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 Stemsation International are associated (or correlated) with Home Bistro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bistro has no effect on the direction of Stemsation International i.e., Stemsation International and Home Bistro go up and down completely randomly.

Pair Corralation between Stemsation International and Home Bistro

If you would invest  2.07  in Stemsation International on December 29, 2024 and sell it today you would lose (1.27) from holding Stemsation International or give up 61.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Stemsation International  vs.  Home Bistro

Stemsation International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stemsation International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Stemsation International displayed solid returns over the last few months and may actually be approaching a breakup point.

Home Bistro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Bistro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Home Bistro is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stemsation International and Home Bistro

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

The idea behind Stemsation International and Home Bistro 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.