Correlation Between OPEN HOUSE and NEW WORLD
Can any of the company-specific risk be diversified away by investing in both OPEN HOUSE and NEW WORLD 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 OPEN HOUSE and NEW WORLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPEN HOUSE GROUP and NEW WORLD DEVCO, you can compare the effects of market volatilities on OPEN HOUSE and NEW WORLD 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 OPEN HOUSE with a short position of NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPEN HOUSE and NEW WORLD.
Diversification Opportunities for OPEN HOUSE and NEW WORLD
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between OPEN and NEW is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding OPEN HOUSE GROUP and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO and OPEN HOUSE 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 OPEN HOUSE GROUP are associated (or correlated) with NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of OPEN HOUSE i.e., OPEN HOUSE and NEW WORLD go up and down completely randomly.
Pair Corralation between OPEN HOUSE and NEW WORLD
Assuming the 90 days horizon OPEN HOUSE GROUP is expected to generate 0.42 times more return on investment than NEW WORLD. However, OPEN HOUSE GROUP is 2.38 times less risky than NEW WORLD. It trades about -0.2 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about -0.28 per unit of risk. If you would invest 3,520 in OPEN HOUSE GROUP on September 24, 2024 and sell it today you would lose (240.00) from holding OPEN HOUSE GROUP or give up 6.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OPEN HOUSE GROUP vs. NEW WORLD DEVCO
Performance |
| Timeline |
| OPEN HOUSE GROUP |
| NEW WORLD DEVCO |
OPEN HOUSE and NEW WORLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OPEN HOUSE and NEW WORLD
The main advantage of trading using opposite OPEN HOUSE and NEW WORLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPEN HOUSE position performs unexpectedly, NEW WORLD 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 NEW WORLD will offset losses from the drop in NEW WORLD's long position.| OPEN HOUSE vs. NEW WORLD DEVCO | OPEN HOUSE vs. AEON MALL LTD | OPEN HOUSE vs. Hufvudstaden AB | OPEN HOUSE vs. FRASERS PROPERTY |
| NEW WORLD vs. OPEN HOUSE GROUP | NEW WORLD vs. AEON MALL LTD | NEW WORLD vs. Hufvudstaden AB | NEW WORLD vs. FRASERS PROPERTY |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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