Correlation Between CITY OFFICE and CREMETRSBI DL-001

Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and CREMETRSBI DL-001 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 CITY OFFICE and CREMETRSBI DL-001 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CITY OFFICE REIT and CREMECOMTRSBI DL 001, you can compare the effects of market volatilities on CITY OFFICE and CREMETRSBI DL-001 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 CITY OFFICE with a short position of CREMETRSBI DL-001. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and CREMETRSBI DL-001.

Diversification Opportunities for CITY OFFICE and CREMETRSBI DL-001

-0.3

Correlation Coefficient

CITY OFFICE  CREMETRSBI DL-001

Very good diversification

The 3 months correlation between CITY and CREMETRSBI is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and CREMECOMTRSBI DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREMECOMTRSBI DL 001 and CITY 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 CITY OFFICE REIT are associated (or correlated) with CREMETRSBI DL-001. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREMECOMTRSBI DL 001 has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and CREMETRSBI DL-001 go up and down completely randomly.

Pair Corralation between CITY OFFICE and CREMETRSBI DL-001

Assuming the 90 days horizon CITY OFFICE is expected to generate 1882.17 times less return on investment than CREMETRSBI DL-001. But when comparing it to its historical volatility, CITY OFFICE REIT is 94.79 times less risky than CREMETRSBI DL-001. It trades about 0.01 of its potential returns per unit of risk. CREMECOMTRSBI DL 001 is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  191.00  in CREMECOMTRSBI DL 001 on October 9, 2024 and sell it today you would lose (21.00) from holding CREMECOMTRSBI DL 001 or give up 10.99% of portfolio value over 90 days.

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

CITY OFFICE REIT  vs.  CREMECOMTRSBI DL 001

CITY OFFICE REIT

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CITY OFFICE REIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITY OFFICE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CREMECOMTRSBI DL 001

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CREMECOMTRSBI DL 001 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CREMETRSBI DL-001 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITY OFFICE and CREMETRSBI DL-001

The main advantage of trading using opposite CITY OFFICE and CREMETRSBI DL-001 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, CREMETRSBI DL-001 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 CREMETRSBI DL-001 will offset losses from the drop in CREMETRSBI DL-001's long position.

The idea behind CITY OFFICE REIT and CREMECOMTRSBI DL 001 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.