Correlation Between CU Tech and Home Center
Can any of the company-specific risk be diversified away by investing in both CU Tech and Home Center 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 CU Tech and Home Center into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Tech Corp and Home Center Holdings, you can compare the effects of market volatilities on CU Tech and Home Center 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 CU Tech with a short position of Home Center. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Tech and Home Center.
Diversification Opportunities for CU Tech and Home Center
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 376290 and Home is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CU Tech Corp and Home Center Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Center Holdings and CU Tech 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 CU Tech Corp are associated (or correlated) with Home Center. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Center Holdings has no effect on the direction of CU Tech i.e., CU Tech and Home Center go up and down completely randomly.
Pair Corralation between CU Tech and Home Center
Assuming the 90 days trading horizon CU Tech Corp is expected to generate 1.77 times more return on investment than Home Center. However, CU Tech is 1.77 times more volatile than Home Center Holdings. It trades about 0.43 of its potential returns per unit of risk. Home Center Holdings is currently generating about -0.45 per unit of risk. If you would invest 295,000 in CU Tech Corp on November 27, 2024 and sell it today you would earn a total of 35,000 from holding CU Tech Corp or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Tech Corp vs. Home Center Holdings
Performance |
| Timeline |
| CU Tech Corp |
| Home Center Holdings |
CU Tech and Home Center Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Tech and Home Center
The main advantage of trading using opposite CU Tech and Home Center positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Tech position performs unexpectedly, Home Center 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 Home Center will offset losses from the drop in Home Center's long position.| CU Tech vs. Sangsin Energy Display | CU Tech vs. Grand Korea Leisure | CU Tech vs. PLAYWITH | CU Tech vs. Korea Computer |
| Home Center vs. SK Chemicals Co | Home Center vs. DoubleU Games Co | Home Center vs. Kukdong Oil Chemicals | Home Center vs. Spolytech 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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