Correlation Between Crescent and Home Invest

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Can any of the company-specific risk be diversified away by investing in both Crescent and Home Invest 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 Crescent and Home Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crescent NV and Home Invest Belgium, you can compare the effects of market volatilities on Crescent and Home Invest 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 Crescent with a short position of Home Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent and Home Invest.

Diversification Opportunities for Crescent and Home Invest

CrescentHomeDiversified AwayCrescentHomeDiversified Away100%
0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Crescent and Home is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Crescent NV and Home Invest Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Invest Belgium and Crescent 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 Crescent NV are associated (or correlated) with Home Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Invest Belgium has no effect on the direction of Crescent i.e., Crescent and Home Invest go up and down completely randomly.

Pair Corralation between Crescent and Home Invest

Assuming the 90 days trading horizon Crescent NV is expected to generate 2.46 times more return on investment than Home Invest. However, Crescent is 2.46 times more volatile than Home Invest Belgium. It trades about -0.01 of its potential returns per unit of risk. Home Invest Belgium is currently generating about -0.17 per unit of risk. If you would invest  1.12  in Crescent NV on September 15, 2024 and sell it today you would lose (0.08) from holding Crescent NV or give up 7.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.48%
ValuesDaily Returns

Crescent NV  vs.  Home Invest Belgium

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -20-15-10-5051015
JavaScript chart by amCharts 3.21.15OPTI HOMI
       Timeline  
Crescent NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Crescent NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Crescent is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.010.0150.020.0250.03
Home Invest Belgium 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Home Invest Belgium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec15.51616.51717.51818.51919.5

Crescent and Home Invest Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.03-4.51-3.0-1.49-0.02521.422.924.425.917.41 0.050.100.15
JavaScript chart by amCharts 3.21.15OPTI HOMI
       Returns  

Pair Trading with Crescent and Home Invest

The main advantage of trading using opposite Crescent and Home Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent position performs unexpectedly, Home Invest 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 Invest will offset losses from the drop in Home Invest's long position.
The idea behind Crescent NV and Home Invest Belgium 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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