Correlation Between CENTURIA OFFICE and Mirvac

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

Diversification Opportunities for CENTURIA OFFICE and Mirvac

0.79

Correlation Coefficient

CENTURIA OFFICE  Mirvac

Poor diversification

The 3 months correlation between CENTURIA and Mirvac is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and Mirvac Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirvac Group 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 Mirvac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirvac Group has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and Mirvac go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and Mirvac

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to generate 1.0 times more return on investment than Mirvac. However, CENTURIA OFFICE is 1.0 times more volatile than Mirvac Group. It trades about -0.38 of its potential returns per unit of risk. Mirvac Group is currently generating about -0.4 per unit of risk. If you would invest  72.00  in CENTURIA OFFICE REIT on September 27, 2024 and sell it today you would lose (9.00) from holding CENTURIA OFFICE REIT or give up 12.5% of portfolio value over 90 days.

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

CENTURIA OFFICE REIT  vs.  Mirvac Group

CENTURIA OFFICE REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTURIA OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mirvac Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirvac Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CENTURIA OFFICE and Mirvac

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

The idea behind CENTURIA OFFICE REIT and Mirvac Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.