Correlation Between Pureun Mutual and Home Center

Can any of the company-specific risk be diversified away by investing in both Pureun Mutual and Home Center 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 Pureun Mutual and Home Center into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pureun Mutual Savings and Home Center Holdings, you can compare the effects of market volatilities on Pureun Mutual and Home Center 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 Pureun Mutual with a short position of Home Center. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pureun Mutual and Home Center.

Diversification Opportunities for Pureun Mutual and Home Center

0.06

Correlation Coefficient

Pureun Mutual  Home Center

Significant diversification

The 3 months correlation between Pureun and Home is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Pureun Mutual Savings and Home Center Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Center Holdings and Pureun Mutual 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 Pureun Mutual Savings are associated (or correlated) with Home Center. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Center Holdings has no effect on the direction of Pureun Mutual i.e., Pureun Mutual and Home Center go up and down completely randomly.

Pair Corralation between Pureun Mutual and Home Center

Assuming the 90 days trading horizon Pureun Mutual Savings is expected to generate 0.28 times more return on investment than Home Center. However, Pureun Mutual Savings is 3.56 times less risky than Home Center. It trades about 0.05 of its potential returns per unit of risk. Home Center Holdings is currently generating about -0.09 per unit of risk. If you would invest  863,000  in Pureun Mutual Savings on September 15, 2024 and sell it today you would earn a total of  21,000  from holding Pureun Mutual Savings or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Pureun Mutual Savings  vs.  Home Center Holdings

Pureun Mutual Savings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pureun Mutual Savings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pureun Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Home Center Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Center Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Pair Trading with Pureun Mutual and Home Center

The main advantage of trading using opposite Pureun Mutual and Home Center positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pureun Mutual position performs unexpectedly, Home Center 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 Home Center will offset losses from the drop in Home Center's long position.

The idea behind Pureun Mutual Savings and Home Center Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.