Correlation Between E Home and TH International

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

By analyzing existing cross correlation between E Home Household Service and TH International Limited, you can compare the effects of market volatilities on E Home and TH International 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 E Home with a short position of TH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and TH International.

Diversification Opportunities for E Home and TH International

-0.46

Correlation Coefficient

E Home  TH International

Very good diversification

The 3 months correlation between EJH and THCH is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service and TH International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TH International and E Home 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 E Home Household Service are associated (or correlated) with TH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TH International has no effect on the direction of E Home i.e., E Home and TH International go up and down completely randomly.

Pair Corralation between E Home and TH International

Considering the 90-day investment horizon E Home Household Service is expected to under-perform the TH International. But the stock apears to be less risky and, when comparing its historical volatility, E Home Household Service is 1.04 times less risky than TH International. The stock trades about -0.09 of its potential returns per unit of risk. The TH International Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  63.00  in TH International Limited on September 15, 2024 and sell it today you would earn a total of  2.00  from holding TH International Limited or generate 3.17% return on investment over 90 days.

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

E Home Household Service  vs.  TH International Limited

E Home Household

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Home Household Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

TH International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TH International Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, TH International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E Home and TH International

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

The idea behind E Home Household Service and TH International Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.