Correlation Between Home Capital and Robot SA

Can any of the company-specific risk be diversified away by investing in both Home Capital and Robot SA 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 Robot SA 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 Robot SA, you can compare the effects of market volatilities on Home Capital and Robot SA 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 Robot SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Robot SA.

Diversification Opportunities for Home Capital and Robot SA

0.69

Correlation Coefficient

Home Capital  Robot SA

Poor diversification

The 3 months correlation between Home and Robot is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Robot SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robot 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 Robot SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robot SA has no effect on the direction of Home Capital i.e., Home Capital and Robot SA go up and down completely randomly.

Pair Corralation between Home Capital and Robot SA

Assuming the 90 days trading horizon Home Capital is expected to generate 37.72 times less return on investment than Robot SA. But when comparing it to its historical volatility, Home Capital Rentals is 35.06 times less risky than Robot SA. It trades about 0.12 of its potential returns per unit of risk. Robot SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  190.00  in Robot SA on April 22, 2025 and sell it today you would earn a total of  54.00  from holding Robot SA or generate 28.42% return on investment over 90 days.

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

Home Capital Rentals  vs.  Robot 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.

Robot SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Robot SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Robot SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Home Capital and Robot SA

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

The idea behind Home Capital Rentals and Robot 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.