Correlation Between Home Product and Halcyon Technology
Can any of the company-specific risk be diversified away by investing in both Home Product and Halcyon Technology 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 Home Product and Halcyon Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Product Center and Halcyon Technology Public, you can compare the effects of market volatilities on Home Product and Halcyon Technology 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 Home Product with a short position of Halcyon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and Halcyon Technology.
Diversification Opportunities for Home Product and Halcyon Technology
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Halcyon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and Halcyon Technology Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halcyon Technology Public and Home Product 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 Home Product Center are associated (or correlated) with Halcyon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halcyon Technology Public has no effect on the direction of Home Product i.e., Home Product and Halcyon Technology go up and down completely randomly.
Pair Corralation between Home Product and Halcyon Technology
Assuming the 90 days trading horizon Home Product Center is expected to under-perform the Halcyon Technology. But the stock apears to be less risky and, when comparing its historical volatility, Home Product Center is 1.66 times less risky than Halcyon Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Halcyon Technology Public is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 379.00 in Halcyon Technology Public on September 2, 2024 and sell it today you would earn a total of 29.00 from holding Halcyon Technology Public or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. Halcyon Technology Public
Performance |
| Timeline |
| Home Product Center |
| Halcyon Technology Public |
Home Product and Halcyon Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and Halcyon Technology
The main advantage of trading using opposite Home Product and Halcyon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, Halcyon Technology 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 Halcyon Technology will offset losses from the drop in Halcyon Technology's long position.| Home Product vs. CP ALL Public | Home Product vs. Bangkok Dusit Medical | Home Product vs. Central Pattana Public | Home Product vs. Advanced Info Service |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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