Correlation Between Home Capital and Pharma Mar

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

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

Diversification Opportunities for Home Capital and Pharma Mar

0.48

Correlation Coefficient

Home Capital  Pharma Mar

Very weak diversification

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

Pair Corralation between Home Capital and Pharma Mar

Assuming the 90 days trading horizon Home Capital Rentals is expected to generate 0.03 times more return on investment than Pharma Mar. However, Home Capital Rentals is 31.53 times less risky than Pharma Mar. It trades about 0.13 of its potential returns per unit of risk. Pharma Mar SA is currently generating about 0.0 per unit of risk. If you would invest  660.00  in Home Capital Rentals on April 23, 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 Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Home Capital Rentals  vs.  Pharma Mar SA

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.

Pharma Mar SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Home Capital and Pharma Mar

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

The idea behind Home Capital Rentals and Pharma Mar SA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.