Correlation Between Cuckoo Homesys and INFINITT Healthcare

Can any of the company-specific risk be diversified away by investing in both Cuckoo Homesys and INFINITT Healthcare 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 Cuckoo Homesys and INFINITT Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cuckoo Homesys Co and INFINITT Healthcare Co, you can compare the effects of market volatilities on Cuckoo Homesys and INFINITT Healthcare 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 Cuckoo Homesys with a short position of INFINITT Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cuckoo Homesys and INFINITT Healthcare.

Diversification Opportunities for Cuckoo Homesys and INFINITT Healthcare

0.21

Correlation Coefficient

Cuckoo Homesys  INFINITT Healthcare

Modest diversification

The 3 months correlation between Cuckoo and INFINITT is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cuckoo Homesys Co and INFINITT Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFINITT Healthcare and Cuckoo Homesys 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 Cuckoo Homesys Co are associated (or correlated) with INFINITT Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFINITT Healthcare has no effect on the direction of Cuckoo Homesys i.e., Cuckoo Homesys and INFINITT Healthcare go up and down completely randomly.

Pair Corralation between Cuckoo Homesys and INFINITT Healthcare

Assuming the 90 days trading horizon Cuckoo Homesys Co is expected to under-perform the INFINITT Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Cuckoo Homesys Co is 1.1 times less risky than INFINITT Healthcare. The stock trades about -0.05 of its potential returns per unit of risk. The INFINITT Healthcare Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  435,000  in INFINITT Healthcare Co on September 22, 2024 and sell it today you would lose (14,000) from holding INFINITT Healthcare Co or give up 3.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cuckoo Homesys Co  vs.  INFINITT Healthcare Co

Cuckoo Homesys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuckoo Homesys Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cuckoo Homesys is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

INFINITT Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INFINITT Healthcare Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INFINITT Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cuckoo Homesys and INFINITT Healthcare

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

The idea behind Cuckoo Homesys Co and INFINITT Healthcare Co 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.