Correlation Between HomeToGo and HEALTHCARE REAL

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

By analyzing existing cross correlation between HomeToGo SE and HEALTHCARE REAL A, you can compare the effects of market volatilities on HomeToGo and HEALTHCARE REAL 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 HomeToGo with a short position of HEALTHCARE REAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and HEALTHCARE REAL.

Diversification Opportunities for HomeToGo and HEALTHCARE REAL

0.32

Correlation Coefficient

HomeToGo  HEALTHCARE REAL

Weak diversification

The 3 months correlation between HomeToGo and HEALTHCARE is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and HEALTHCARE REAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHCARE REAL A and HomeToGo 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 HomeToGo SE are associated (or correlated) with HEALTHCARE REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHCARE REAL A has no effect on the direction of HomeToGo i.e., HomeToGo and HEALTHCARE REAL go up and down completely randomly.

Pair Corralation between HomeToGo and HEALTHCARE REAL

Assuming the 90 days trading horizon HomeToGo SE is expected to generate 1.8 times more return on investment than HEALTHCARE REAL. However, HomeToGo is 1.8 times more volatile than HEALTHCARE REAL A. It trades about 0.14 of its potential returns per unit of risk. HEALTHCARE REAL A is currently generating about 0.09 per unit of risk. If you would invest  179.00  in HomeToGo SE on September 4, 2024 and sell it today you would earn a total of  43.00  from holding HomeToGo SE or generate 24.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

HomeToGo SE  vs.  HEALTHCARE REAL A

HomeToGo SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HomeToGo SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, HomeToGo unveiled solid returns over the last few months and may actually be approaching a breakup point.

HEALTHCARE REAL A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEALTHCARE REAL A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, HEALTHCARE REAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HomeToGo and HEALTHCARE REAL

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

The idea behind HomeToGo SE and HEALTHCARE REAL A 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.