Correlation Between Home Center and Genie Music
Can any of the company-specific risk be diversified away by investing in both Home Center and Genie Music 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 Center and Genie Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Center Holdings and Genie Music, you can compare the effects of market volatilities on Home Center and Genie Music 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 Center with a short position of Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Center and Genie Music.
Diversification Opportunities for Home Center and Genie Music
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Genie is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Home Center Holdings and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music and Home Center 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 Center Holdings are associated (or correlated) with Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of Home Center i.e., Home Center and Genie Music go up and down completely randomly.
Pair Corralation between Home Center and Genie Music
Assuming the 90 days trading horizon Home Center Holdings is expected to under-perform the Genie Music. But the stock apears to be less risky and, when comparing its historical volatility, Home Center Holdings is 1.32 times less risky than Genie Music. The stock trades about -0.05 of its potential returns per unit of risk. The Genie Music is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 274,000 in Genie Music on September 28, 2024 and sell it today you would lose (59,000) from holding Genie Music or give up 21.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.35% |
| Values | Daily Returns |
Home Center Holdings vs. Genie Music
Performance |
| Timeline |
| Home Center Holdings |
| Genie Music |
Home Center and Genie Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Center and Genie Music
The main advantage of trading using opposite Home Center and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Center position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music's long position.| Home Center vs. LG Chemicals | Home Center vs. POSCO Holdings | Home Center vs. Hanwha Solutions | Home Center vs. Lotte Chemical Corp |
| Genie Music vs. Hanshin Construction Co | Genie Music vs. GS Engineering Construction | Genie Music vs. Duksan Hi Metal | Genie Music vs. MetaLabs Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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