Correlation Between Inhome Prime and Industria

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

By analyzing existing cross correlation between Inhome Prime Properties and Industria de Diseno, you can compare the effects of market volatilities on Inhome Prime and Industria 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 Inhome Prime with a short position of Industria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inhome Prime and Industria.

Diversification Opportunities for Inhome Prime and Industria

-0.51

Correlation Coefficient

Inhome Prime  Industria

Excellent diversification

The 3 months correlation between Inhome and Industria is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Inhome Prime Properties and Industria de Diseno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseno and Inhome Prime 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 Inhome Prime Properties are associated (or correlated) with Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseno has no effect on the direction of Inhome Prime i.e., Inhome Prime and Industria go up and down completely randomly.

Pair Corralation between Inhome Prime and Industria

Assuming the 90 days trading horizon Inhome Prime is expected to generate 3.78 times less return on investment than Industria. But when comparing it to its historical volatility, Inhome Prime Properties is 1.96 times less risky than Industria. It trades about 0.06 of its potential returns per unit of risk. Industria de Diseno is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,570  in Industria de Diseno on October 12, 2024 and sell it today you would earn a total of  2,540  from holding Industria de Diseno or generate 98.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.88%
Values	Daily Returns

Inhome Prime Properties  vs.  Industria de Diseno

Inhome Prime Properties

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inhome Prime Properties are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Inhome Prime exhibited solid returns over the last few months and may actually be approaching a breakup point.

Industria de Diseno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industria de Diseno has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Industria is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Inhome Prime and Industria

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

The idea behind Inhome Prime Properties and Industria de Diseno 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.