Correlation Between Home First and G Tec

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

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

Diversification Opportunities for Home First and G Tec

0.88

Correlation Coefficient

Home First  G Tec

Very poor diversification

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

Pair Corralation between Home First and G Tec

Assuming the 90 days trading horizon Home First Finance is expected to generate 0.62 times more return on investment than G Tec. However, Home First Finance is 1.62 times less risky than G Tec. It trades about 0.04 of its potential returns per unit of risk. G Tec Jainx Education is currently generating about 0.02 per unit of risk. If you would invest  74,517  in Home First Finance on September 21, 2024 and sell it today you would earn a total of  28,658  from holding Home First Finance or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	78.64%
Values	Daily Returns

Home First Finance  vs.  G Tec Jainx Education

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.

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.

Pair Trading with Home First and G Tec

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

The idea behind Home First Finance and G Tec Jainx Education 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.