Correlation Between Mida Leasing and Home Product

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

By analyzing existing cross correlation between Mida Leasing Public and Home Product Center, you can compare the effects of market volatilities on Mida Leasing and Home Product 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 Mida Leasing with a short position of Home Product. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mida Leasing and Home Product.

Diversification Opportunities for Mida Leasing and Home Product

-0.5

Correlation Coefficient

Mida Leasing  Home Product

Very good diversification

The 3 months correlation between Mida and Home is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mida Leasing Public and Home Product Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Product Center and Mida Leasing 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 Mida Leasing Public are associated (or correlated) with Home Product. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Product Center has no effect on the direction of Mida Leasing i.e., Mida Leasing and Home Product go up and down completely randomly.

Pair Corralation between Mida Leasing and Home Product

Assuming the 90 days horizon Mida Leasing Public is expected to under-perform the Home Product. In addition to that, Mida Leasing is 1.56 times more volatile than Home Product Center. It trades about -0.23 of its total potential returns per unit of risk. Home Product Center is currently generating about -0.03 per unit of volatility. If you would invest  1,048  in Home Product Center on February 2, 2024 and sell it today you would lose (8.00) from holding Home Product Center or give up 0.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mida Leasing Public  vs.  Home Product Center

Mida Leasing Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mida Leasing Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Home Product Center

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Home Product Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Home Product is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mida Leasing and Home Product

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

The idea behind Mida Leasing Public and Home Product Center 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.