Correlation Between 3M India and Home First
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By analyzing existing cross correlation between 3M India Limited and Home First Finance, you can compare the effects of market volatilities on 3M India and Home First 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 3M India with a short position of Home First. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M India and Home First.
Diversification Opportunities for 3M India and Home First
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3MINDIA and Home is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding 3M India Limited and Home First Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home First Finance and 3M India 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 3M India Limited are associated (or correlated) with Home First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home First Finance has no effect on the direction of 3M India i.e., 3M India and Home First go up and down completely randomly.
Pair Corralation between 3M India and Home First
Assuming the 90 days trading horizon 3M India Limited is expected to under-perform the Home First. But the stock apears to be less risky and, when comparing its historical volatility, 3M India Limited is 1.58 times less risky than Home First. The stock trades about -0.1 of its potential returns per unit of risk. The Home First Finance is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 112,905 in Home First Finance on November 2, 2024 and sell it today you would lose (18,395) from holding Home First Finance or give up 16.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.05% |
| Values | Daily Returns |
3M India Limited vs. Home First Finance
Performance |
| Timeline |
| 3M India Limited |
| Home First Finance |
3M India and Home First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M India and Home First
The main advantage of trading using opposite 3M India and Home First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M India position performs unexpectedly, Home First 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 First will offset losses from the drop in Home First's long position.| 3M India vs. Indian Railway Finance | 3M India vs. Cholamandalam Financial Holdings | 3M India vs. Reliance Industries Limited | 3M India vs. Tata Consultancy Services |
| Home First vs. Network18 Media Investments | Home First vs. Omkar Speciality Chemicals | Home First vs. Infomedia Press Limited | Home First vs. JGCHEMICALS LIMITED |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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