Correlation Between Cornerstone Strategic and H2O Retailing

Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and H2O Retailing 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 Cornerstone Strategic and H2O Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cornerstone Strategic Value and H2O Retailing, you can compare the effects of market volatilities on Cornerstone Strategic and H2O Retailing 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 Cornerstone Strategic with a short position of H2O Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and H2O Retailing.

Diversification Opportunities for Cornerstone Strategic and H2O Retailing

-0.56

Correlation Coefficient

Cornerstone Strategic  H2O Retailing

Excellent diversification

The 3 months correlation between Cornerstone and H2O is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and H2O Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H2O Retailing and Cornerstone Strategic 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 Cornerstone Strategic Value are associated (or correlated) with H2O Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H2O Retailing has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and H2O Retailing go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and H2O Retailing

Considering the 90-day investment horizon Cornerstone Strategic Value is expected to under-perform the H2O Retailing. But the fund apears to be less risky and, when comparing its historical volatility, Cornerstone Strategic Value is 1.6 times less risky than H2O Retailing. The fund trades about -0.02 of its potential returns per unit of risk. The H2O Retailing is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,120  in H2O Retailing on May 5, 2025 and sell it today you would earn a total of  60.00  from holding H2O Retailing or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Cornerstone Strategic Value  vs.  H2O Retailing

Cornerstone Strategic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak essential indicators, Cornerstone Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

H2O Retailing

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in H2O Retailing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, H2O Retailing is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cornerstone Strategic and H2O Retailing

The main advantage of trading using opposite Cornerstone Strategic and H2O Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic position performs unexpectedly, H2O Retailing 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 H2O Retailing will offset losses from the drop in H2O Retailing's long position.

The idea behind Cornerstone Strategic Value and H2O Retailing 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.