Correlation Between CAIRN HOMES and PAX Global
Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES and PAX Global 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 CAIRN HOMES and PAX Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIRN HOMES EO and PAX Global Technology, you can compare the effects of market volatilities on CAIRN HOMES and PAX Global 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 CAIRN HOMES with a short position of PAX Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and PAX Global.
Diversification Opportunities for CAIRN HOMES and PAX Global
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between CAIRN and PAX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and PAX Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAX Global Technology and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with PAX Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAX Global Technology has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and PAX Global go up and down completely randomly.
Pair Corralation between CAIRN HOMES and PAX Global
Assuming the 90 days horizon CAIRN HOMES EO is expected to under-perform the PAX Global. But the stock apears to be less risky and, when comparing its historical volatility, CAIRN HOMES EO is 1.42 times less risky than PAX Global. The stock trades about -0.27 of its potential returns per unit of risk. The PAX Global Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 61.00 in PAX Global Technology on October 25, 2024 and sell it today you would earn a total of 0.00 from holding PAX Global Technology or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAIRN HOMES EO vs. PAX Global Technology
Performance |
| Timeline |
| CAIRN HOMES EO |
| PAX Global Technology |
CAIRN HOMES and PAX Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIRN HOMES and PAX Global
The main advantage of trading using opposite CAIRN HOMES and PAX Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIRN HOMES position performs unexpectedly, PAX Global 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 PAX Global will offset losses from the drop in PAX Global's long position.| CAIRN HOMES vs. NEW MILLENNIUM IRON | CAIRN HOMES vs. RELIANCE STEEL AL | CAIRN HOMES vs. Olympic Steel | CAIRN HOMES vs. The Japan Steel |
| PAX Global vs. Hisense Home Appliances | PAX Global vs. Focus Home Interactive | PAX Global vs. ONWARD MEDICAL BV | PAX Global vs. CAIRN HOMES EO |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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