Correlation Between Redeia Corporacion and Home Capital

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

By analyzing existing cross correlation between Redeia Corporacion SA and Home Capital Rentals, you can compare the effects of market volatilities on Redeia Corporacion and Home Capital 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 Redeia Corporacion with a short position of Home Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redeia Corporacion and Home Capital.

Diversification Opportunities for Redeia Corporacion and Home Capital

-0.79

Correlation Coefficient

Redeia Corporacion  Home Capital

Pay attention - limited upside

The 3 months correlation between Redeia and Home is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Redeia Corporacion SA and Home Capital Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Capital Rentals and Redeia Corporacion 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 Redeia Corporacion SA are associated (or correlated) with Home Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Capital Rentals has no effect on the direction of Redeia Corporacion i.e., Redeia Corporacion and Home Capital go up and down completely randomly.

Pair Corralation between Redeia Corporacion and Home Capital

Assuming the 90 days trading horizon Redeia Corporacion SA is expected to under-perform the Home Capital. In addition to that, Redeia Corporacion is 10.74 times more volatile than Home Capital Rentals. It trades about -0.07 of its total potential returns per unit of risk. Home Capital Rentals is currently generating about 0.12 per unit of volatility. If you would invest  660.00  in Home Capital Rentals on April 22, 2025 and sell it today you would earn a total of  5.00  from holding Home Capital Rentals or generate 0.76% return on investment over 90 days.

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

Redeia Corporacion SA  vs.  Home Capital Rentals

Redeia Corporacion

Risk-Adjusted Performance

Very Weak

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

Home Capital Rentals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Home Capital Rentals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Home Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Redeia Corporacion and Home Capital

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

The idea behind Redeia Corporacion SA and Home Capital Rentals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.