Correlation Between Sweeten Real and Shining Building

Can any of the company-specific risk be diversified away by investing in both Sweeten Real and Shining Building 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 Sweeten Real and Shining Building into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sweeten Real Estate and Shining Building Business, you can compare the effects of market volatilities on Sweeten Real and Shining Building 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 Sweeten Real with a short position of Shining Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweeten Real and Shining Building.

Diversification Opportunities for Sweeten Real and Shining Building

0.75

Correlation Coefficient

Sweeten Real  Shining Building

Poor diversification

The 3 months correlation between Sweeten and Shining is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sweeten Real Estate and Shining Building Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shining Building Business and Sweeten Real 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 Sweeten Real Estate are associated (or correlated) with Shining Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shining Building Business has no effect on the direction of Sweeten Real i.e., Sweeten Real and Shining Building go up and down completely randomly.

Pair Corralation between Sweeten Real and Shining Building

Assuming the 90 days trading horizon Sweeten Real Estate is expected to under-perform the Shining Building. But the stock apears to be less risky and, when comparing its historical volatility, Sweeten Real Estate is 2.28 times less risky than Shining Building. The stock trades about -0.32 of its potential returns per unit of risk. The Shining Building Business is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,165  in Shining Building Business on October 26, 2024 and sell it today you would lose (120.00) from holding Shining Building Business or give up 10.3% of portfolio value over 90 days.

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

Sweeten Real Estate  vs.  Shining Building Business

Sweeten Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sweeten Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sweeten Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shining Building Business

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shining Building Business are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shining Building 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 Sweeten Real and Shining Building

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

The idea behind Sweeten Real Estate and Shining Building Business 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.