Correlation Between CENTURIA OFFICE and LVMH Mot

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

Diversification Opportunities for CENTURIA OFFICE and LVMH Mot

-0.38

Correlation Coefficient

CENTURIA OFFICE  LVMH Mot

Very good diversification

The 3 months correlation between CENTURIA and LVMH is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy 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 LVMH Mot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and LVMH Mot go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and LVMH Mot

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to under-perform the LVMH Mot. In addition to that, CENTURIA OFFICE is 1.08 times more volatile than LVMH Mot Hennessy. It trades about -0.04 of its total potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.23 per unit of volatility. If you would invest  59,165  in LVMH Mot Hennessy on October 25, 2024 and sell it today you would earn a total of  12,165  from holding LVMH Mot Hennessy or generate 20.56% return on investment over 90 days.

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

CENTURIA OFFICE REIT  vs.  LVMH Mot Hennessy

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 nearly stable basic indicators, CENTURIA OFFICE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

LVMH Mot Hennessy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LVMH Mot Hennessy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile technical indicators, LVMH Mot sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CENTURIA OFFICE and LVMH Mot

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

The idea behind CENTURIA OFFICE REIT and LVMH Mot Hennessy 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 Transaction History module to view history of all your transactions and understand their impact on performance.