Correlation Between H2O Retailing and CAIRN HOMES
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and CAIRN HOMES 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 H2O Retailing and CAIRN HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and CAIRN HOMES EO, you can compare the effects of market volatilities on H2O Retailing and CAIRN HOMES 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 H2O Retailing with a short position of CAIRN HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and CAIRN HOMES.
Diversification Opportunities for H2O Retailing and CAIRN HOMES
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between H2O and CAIRN is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and CAIRN HOMES EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAIRN HOMES EO and H2O Retailing 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 H2O Retailing are associated (or correlated) with CAIRN HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAIRN HOMES EO has no effect on the direction of H2O Retailing i.e., H2O Retailing and CAIRN HOMES go up and down completely randomly.
Pair Corralation between H2O Retailing and CAIRN HOMES
Assuming the 90 days horizon H2O Retailing is expected to generate 0.91 times more return on investment than CAIRN HOMES. However, H2O Retailing is 1.1 times less risky than CAIRN HOMES. It trades about 0.03 of its potential returns per unit of risk. CAIRN HOMES EO is currently generating about -0.04 per unit of risk. If you would invest 1,340 in H2O Retailing on October 16, 2024 and sell it today you would earn a total of 10.00 from holding H2O Retailing or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
H2O Retailing vs. CAIRN HOMES EO
Performance |
| Timeline |
| H2O Retailing |
| CAIRN HOMES EO |
H2O Retailing and CAIRN HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and CAIRN HOMES
The main advantage of trading using opposite H2O Retailing and CAIRN HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, CAIRN HOMES 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 CAIRN HOMES will offset losses from the drop in CAIRN HOMES's long position.| H2O Retailing vs. Vishay Intertechnology | H2O Retailing vs. EEDUCATION ALBERT AB | H2O Retailing vs. Casio Computer CoLtd | H2O Retailing vs. Strategic Education |
| CAIRN HOMES vs. H2O Retailing | CAIRN HOMES vs. SALESFORCE INC CDR | CAIRN HOMES vs. Salesforce | CAIRN HOMES vs. The Trade Desk |
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 Stocks Directory module to find actively traded stocks across global markets.
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