Correlation Between G Tec and Home First

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

By analyzing existing cross correlation between G Tec Jainx Education and Home First Finance, you can compare the effects of market volatilities on G Tec and Home First 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 G Tec with a short position of Home First. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Tec and Home First.

Diversification Opportunities for G Tec and Home First

0.88

Correlation Coefficient

G Tec  Home First

Very poor diversification

The 3 months correlation between GTECJAINX and Home is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and Home First Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home First Finance and G Tec 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 G Tec Jainx Education are associated (or correlated) with Home First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home First Finance has no effect on the direction of G Tec i.e., G Tec and Home First go up and down completely randomly.

Pair Corralation between G Tec and Home First

Assuming the 90 days trading horizon G Tec Jainx Education is expected to under-perform the Home First. In addition to that, G Tec is 1.28 times more volatile than Home First Finance. It trades about -0.22 of its total potential returns per unit of risk. Home First Finance is currently generating about -0.13 per unit of volatility. If you would invest  129,645  in Home First Finance on September 21, 2024 and sell it today you would lose (26,470) from holding Home First Finance or give up 20.42% of portfolio value over 90 days.

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

G Tec Jainx Education  vs.  Home First Finance

G Tec Jainx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Tec Jainx Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward 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.

Home First Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home First Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with G Tec and Home First

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

The idea behind G Tec Jainx Education and Home First Finance 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.