Correlation Between Honeywell Automation and Repco Home

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Can any of the company-specific risk be diversified away by investing in both Honeywell Automation and Repco Home 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 Honeywell Automation and Repco Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell Automation India and Repco Home Finance, you can compare the effects of market volatilities on Honeywell Automation and Repco Home 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 Honeywell Automation with a short position of Repco Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell Automation and Repco Home.

Diversification Opportunities for Honeywell Automation and Repco Home

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Honeywell and Repco is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell Automation India and Repco Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repco Home Finance and Honeywell Automation 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 Honeywell Automation India are associated (or correlated) with Repco Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repco Home Finance has no effect on the direction of Honeywell Automation i.e., Honeywell Automation and Repco Home go up and down completely randomly.

Pair Corralation between Honeywell Automation and Repco Home

Assuming the 90 days trading horizon Honeywell Automation India is expected to generate 0.43 times more return on investment than Repco Home. However, Honeywell Automation India is 2.35 times less risky than Repco Home. It trades about -0.03 of its potential returns per unit of risk. Repco Home Finance is currently generating about -0.23 per unit of risk. If you would invest  4,141,300  in Honeywell Automation India on September 24, 2024 and sell it today you would lose (33,520) from holding Honeywell Automation India or give up 0.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Honeywell Automation India  vs.  Repco Home Finance

 Performance 
       Timeline  
Honeywell Automation 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Honeywell Automation India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Repco Home Finance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Repco Home Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Honeywell Automation and Repco Home Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Honeywell Automation and Repco Home

The main advantage of trading using opposite Honeywell Automation and Repco Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell Automation position performs unexpectedly, Repco Home 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 Repco Home will offset losses from the drop in Repco Home's long position.
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The idea behind Honeywell Automation India and Repco Home Finance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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