Correlation Between Hammerson PLC and HomeChoice Investments
Can any of the company-specific risk be diversified away by investing in both Hammerson PLC and HomeChoice Investments 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 Hammerson PLC and HomeChoice Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hammerson PLC and HomeChoice Investments, you can compare the effects of market volatilities on Hammerson PLC and HomeChoice Investments 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 Hammerson PLC with a short position of HomeChoice Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hammerson PLC and HomeChoice Investments.
Diversification Opportunities for Hammerson PLC and HomeChoice Investments
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hammerson and HomeChoice is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hammerson PLC and HomeChoice Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeChoice Investments and Hammerson PLC 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 Hammerson PLC are associated (or correlated) with HomeChoice Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeChoice Investments has no effect on the direction of Hammerson PLC i.e., Hammerson PLC and HomeChoice Investments go up and down completely randomly.
Pair Corralation between Hammerson PLC and HomeChoice Investments
Assuming the 90 days trading horizon Hammerson PLC is expected to generate 23.15 times more return on investment than HomeChoice Investments. However, Hammerson PLC is 23.15 times more volatile than HomeChoice Investments. It trades about 0.07 of its potential returns per unit of risk. HomeChoice Investments is currently generating about 0.08 per unit of risk. If you would invest 66,500 in Hammerson PLC on September 3, 2024 and sell it today you would earn a total of 602,100 from holding Hammerson PLC or generate 905.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
Hammerson PLC vs. HomeChoice Investments
Performance |
| Timeline |
| Hammerson PLC |
| HomeChoice Investments |
Hammerson PLC and HomeChoice Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hammerson PLC and HomeChoice Investments
The main advantage of trading using opposite Hammerson PLC and HomeChoice Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hammerson PLC position performs unexpectedly, HomeChoice Investments 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 HomeChoice Investments will offset losses from the drop in HomeChoice Investments' long position.| Hammerson PLC vs. Datatec | Hammerson PLC vs. Astoria Investments | Hammerson PLC vs. ABSA Bank Limited | Hammerson PLC vs. E Media Holdings |
| HomeChoice Investments vs. Foschini Group | HomeChoice Investments vs. Sasol Ltd Bee | HomeChoice Investments vs. Centaur Bci Balanced | HomeChoice Investments vs. Growthpoint Properties |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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