Correlation Between House Of and MRC Allied

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

By analyzing existing cross correlation between House of Investments and MRC Allied, you can compare the effects of market volatilities on House Of and MRC Allied 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 House Of with a short position of MRC Allied. Check out your portfolio center. Please also check ongoing floating volatility patterns of House Of and MRC Allied.

Diversification Opportunities for House Of and MRC Allied

-0.2

Correlation Coefficient

House Of  MRC Allied

Good diversification

The 3 months correlation between House and MRC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding House of Investments and MRC Allied in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Allied and House Of 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 House of Investments are associated (or correlated) with MRC Allied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Allied has no effect on the direction of House Of i.e., House Of and MRC Allied go up and down completely randomly.

Pair Corralation between House Of and MRC Allied

Assuming the 90 days trading horizon House of Investments is expected to under-perform the MRC Allied. But the stock apears to be less risky and, when comparing its historical volatility, House of Investments is 3.01 times less risky than MRC Allied. The stock trades about -0.04 of its potential returns per unit of risk. The MRC Allied is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  59.00  in MRC Allied on April 25, 2025 and sell it today you would earn a total of  29.00  from holding MRC Allied or generate 49.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

House of Investments  vs.  MRC Allied

House of Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days House of Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, House Of is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

MRC Allied

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MRC Allied are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, MRC Allied exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with House Of and MRC Allied

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

The idea behind House of Investments and MRC Allied 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.