Correlation Between STRAITS TRADG and M/I Homes

Can any of the company-specific risk be diversified away by investing in both STRAITS TRADG and M/I Homes 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 STRAITS TRADG and M/I Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STRAITS TRADG SD and MI Homes, you can compare the effects of market volatilities on STRAITS TRADG and M/I Homes 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 STRAITS TRADG with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAITS TRADG and M/I Homes.

Diversification Opportunities for STRAITS TRADG and M/I Homes

0.48

Correlation Coefficient

STRAITS TRADG  M/I Homes

Very weak diversification

The 3 months correlation between STRAITS and M/I is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding STRAITS TRADG SD and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and STRAITS TRADG 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 STRAITS TRADG SD are associated (or correlated) with M/I Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M/I Homes has no effect on the direction of STRAITS TRADG i.e., STRAITS TRADG and M/I Homes go up and down completely randomly.

Pair Corralation between STRAITS TRADG and M/I Homes

Assuming the 90 days horizon STRAITS TRADG SD is expected to generate 0.87 times more return on investment than M/I Homes. However, STRAITS TRADG SD is 1.15 times less risky than M/I Homes. It trades about 0.21 of its potential returns per unit of risk. MI Homes is currently generating about 0.05 per unit of risk. If you would invest  87.00  in STRAITS TRADG SD on April 24, 2025 and sell it today you would earn a total of  23.00  from holding STRAITS TRADG SD or generate 26.44% return on investment over 90 days.

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

STRAITS TRADG SD  vs.  MI Homes

STRAITS TRADG SD

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STRAITS TRADG SD are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, STRAITS TRADG reported solid returns over the last few months and may actually be approaching a breakup point.

M/I Homes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MI Homes are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, M/I Homes may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with STRAITS TRADG and M/I Homes

The main advantage of trading using opposite STRAITS TRADG and M/I Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAITS TRADG position performs unexpectedly, M/I Homes 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 M/I Homes will offset losses from the drop in M/I Homes' long position.

The idea behind STRAITS TRADG SD and MI Homes 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 Valuation module to check real value of public entities based on technical and fundamental data.