Correlation Between CSIF III and SF Sustainable

Can any of the company-specific risk be diversified away by investing in both CSIF III and SF Sustainable 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 CSIF III and SF Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSIF III Equity and SF Sustainable Property, you can compare the effects of market volatilities on CSIF III and SF Sustainable 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 CSIF III with a short position of SF Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSIF III and SF Sustainable.

Diversification Opportunities for CSIF III and SF Sustainable

-0.15

Correlation Coefficient

CSIF III  SF Sustainable

Good diversification

The 3 months correlation between CSIF and SFPF is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CSIF III Equity and SF Sustainable Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SF Sustainable Property and CSIF III 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 CSIF III Equity are associated (or correlated) with SF Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SF Sustainable Property has no effect on the direction of CSIF III i.e., CSIF III and SF Sustainable go up and down completely randomly.

Pair Corralation between CSIF III and SF Sustainable

Assuming the 90 days trading horizon CSIF III Equity is expected to under-perform the SF Sustainable. But the fund apears to be less risky and, when comparing its historical volatility, CSIF III Equity is 1.11 times less risky than SF Sustainable. The fund trades about -0.29 of its potential returns per unit of risk. The SF Sustainable Property is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  12,650  in SF Sustainable Property on September 27, 2024 and sell it today you would earn a total of  300.00  from holding SF Sustainable Property or generate 2.37% return on investment over 90 days.

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

CSIF III Equity  vs.  SF Sustainable Property

CSIF III Equity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSIF III Equity are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, CSIF III is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SF Sustainable Property

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SF Sustainable Property are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, SF Sustainable is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CSIF III and SF Sustainable

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

The idea behind CSIF III Equity and SF Sustainable Property 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.