Correlation Between Home Center and LabGenomics
Can any of the company-specific risk be diversified away by investing in both Home Center and LabGenomics 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 LabGenomics 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 LabGenomics Co, you can compare the effects of market volatilities on Home Center and LabGenomics 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 LabGenomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Center and LabGenomics.
Diversification Opportunities for Home Center and LabGenomics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and LabGenomics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Center Holdings and LabGenomics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LabGenomics 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 LabGenomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LabGenomics has no effect on the direction of Home Center i.e., Home Center and LabGenomics go up and down completely randomly.
Pair Corralation between Home Center and LabGenomics
Assuming the 90 days trading horizon Home Center Holdings is expected to generate 0.76 times more return on investment than LabGenomics. However, Home Center Holdings is 1.32 times less risky than LabGenomics. It trades about -0.1 of its potential returns per unit of risk. LabGenomics Co is currently generating about -0.48 per unit of risk. If you would invest 80,600 in Home Center Holdings on September 3, 2024 and sell it today you would lose (3,900) from holding Home Center Holdings or give up 4.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Center Holdings vs. LabGenomics Co
Performance |
| Timeline |
| Home Center Holdings |
| LabGenomics |
Home Center and LabGenomics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Center and LabGenomics
The main advantage of trading using opposite Home Center and LabGenomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Center position performs unexpectedly, LabGenomics 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 LabGenomics will offset losses from the drop in LabGenomics' long position.| Home Center vs. Aprogen Healthcare Games | Home Center vs. Sejong Telecom | Home Center vs. Daishin Information Communications | Home Center vs. Hanjin Transportation Co |
| LabGenomics vs. SH Energy Chemical | LabGenomics vs. Miwon Chemical | LabGenomics vs. Barunson Entertainment Arts | LabGenomics vs. Posco Chemical 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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