Correlation Between Home Capital and Tander Inversiones

Can any of the company-specific risk be diversified away by investing in both Home Capital and Tander Inversiones 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 Tander Inversiones 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 Tander Inversiones SOCIMI, you can compare the effects of market volatilities on Home Capital and Tander Inversiones 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 Tander Inversiones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Tander Inversiones.

Diversification Opportunities for Home Capital and Tander Inversiones

-0.2

Correlation Coefficient

Home Capital  Tander Inversiones

Good diversification

The 3 months correlation between Home and Tander is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Tander Inversiones SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tander Inversiones SOCIMI 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 Tander Inversiones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tander Inversiones SOCIMI has no effect on the direction of Home Capital i.e., Home Capital and Tander Inversiones go up and down completely randomly.

Pair Corralation between Home Capital and Tander Inversiones

Assuming the 90 days trading horizon Home Capital Rentals is expected to under-perform the Tander Inversiones. In addition to that, Home Capital is 4.61 times more volatile than Tander Inversiones SOCIMI. It trades about -0.13 of its total potential returns per unit of risk. Tander Inversiones SOCIMI is currently generating about 0.13 per unit of volatility. If you would invest  1,200  in Tander Inversiones SOCIMI on December 24, 2024 and sell it today you would earn a total of  20.00  from holding Tander Inversiones SOCIMI or generate 1.67% return on investment over 90 days.

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

Home Capital Rentals  vs.  Tander Inversiones SOCIMI

Home Capital Rentals

Risk-Adjusted Performance

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.

Tander Inversiones SOCIMI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tander Inversiones SOCIMI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Tander Inversiones is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Home Capital and Tander Inversiones

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

The idea behind Home Capital Rentals and Tander Inversiones SOCIMI 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.