Correlation Between Home Capital and Asturiana
Can any of the company-specific risk be diversified away by investing in both Home Capital and Asturiana 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 Capital and Asturiana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Rentals and Asturiana de Laminados, you can compare the effects of market volatilities on Home Capital and Asturiana 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 Capital with a short position of Asturiana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Asturiana.
Diversification Opportunities for Home Capital and Asturiana
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Asturiana is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Asturiana de Laminados in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asturiana de Laminados and Home Capital 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 Capital Rentals are associated (or correlated) with Asturiana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asturiana de Laminados has no effect on the direction of Home Capital i.e., Home Capital and Asturiana go up and down completely randomly.
Pair Corralation between Home Capital and Asturiana
Assuming the 90 days trading horizon Home Capital Rentals is expected to generate 0.23 times more return on investment than Asturiana. However, Home Capital Rentals is 4.33 times less risky than Asturiana. It trades about -0.04 of its potential returns per unit of risk. Asturiana de Laminados is currently generating about -0.03 per unit of risk. If you would invest 715.00 in Home Capital Rentals on September 12, 2024 and sell it today you would lose (60.00) from holding Home Capital Rentals or give up 8.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 38.1% |
| Values | Daily Returns |
Home Capital Rentals vs. Asturiana de Laminados
Performance |
| Timeline |
| Home Capital Rentals |
| Asturiana de Laminados |
Home Capital and Asturiana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Capital and Asturiana
The main advantage of trading using opposite Home Capital and Asturiana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital position performs unexpectedly, Asturiana 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 Asturiana will offset losses from the drop in Asturiana's long position.| Home Capital vs. Airbus Group SE | Home Capital vs. Industria de Diseno | Home Capital vs. Vale SA | Home Capital vs. Iberdrola SA |
| Asturiana vs. Plasticos Compuestos SA | Asturiana vs. Bankinter | Asturiana vs. Borges Agricultural Industrial | Asturiana vs. Labiana Health SA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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