Correlation Between CENTURIA OFFICE and Vale SA

Can any of the company-specific risk be diversified away by investing in both CENTURIA OFFICE and Vale 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 CENTURIA OFFICE and Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CENTURIA OFFICE REIT and Vale SA, you can compare the effects of market volatilities on CENTURIA OFFICE and Vale 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 CENTURIA OFFICE with a short position of Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and Vale SA.

Diversification Opportunities for CENTURIA OFFICE and Vale SA

0.15

Correlation Coefficient

CENTURIA OFFICE  Vale SA

Average diversification

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

Pair Corralation between CENTURIA OFFICE and Vale SA

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to generate 1.35 times more return on investment than Vale SA. However, CENTURIA OFFICE is 1.35 times more volatile than Vale SA. It trades about 0.1 of its potential returns per unit of risk. Vale SA is currently generating about 0.1 per unit of risk. If you would invest  58.00  in CENTURIA OFFICE REIT on December 29, 2024 and sell it today you would earn a total of  7.00  from holding CENTURIA OFFICE REIT or generate 12.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CENTURIA OFFICE REIT  vs.  Vale SA

CENTURIA OFFICE REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CENTURIA OFFICE REIT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CENTURIA OFFICE reported solid returns over the last few months and may actually be approaching a breakup point.

Vale SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Vale SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CENTURIA OFFICE and Vale SA

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

The idea behind CENTURIA OFFICE REIT and Vale 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.

Check out your portfolio center.

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.