Correlation Between Home Capital and Millenium Hotels

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

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

Diversification Opportunities for Home Capital and Millenium Hotels

-0.18

Correlation Coefficient

Home Capital  Millenium Hotels

Good diversification

The 3 months correlation between Home and Millenium is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real and Home Capital 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 Home Capital Rentals are associated (or correlated) with Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Home Capital i.e., Home Capital and Millenium Hotels go up and down completely randomly.

Pair Corralation between Home Capital and Millenium Hotels

Assuming the 90 days trading horizon Home Capital Rentals is expected to under-perform the Millenium Hotels. In addition to that, Home Capital is 1.14 times more volatile than Millenium Hotels Real. It trades about -0.23 of its total potential returns per unit of risk. Millenium Hotels Real is currently generating about 0.1 per unit of volatility. If you would invest  268.00  in Millenium Hotels Real on October 10, 2024 and sell it today you would earn a total of  8.00  from holding Millenium Hotels Real or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Home Capital Rentals  vs.  Millenium Hotels Real

Home Capital Rentals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Capital Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Millenium Hotels Real

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Millenium Hotels Real are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Millenium Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Home Capital and Millenium Hotels

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

The idea behind Home Capital Rentals and Millenium Hotels Real 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.