Correlation Between Adler Group and CBL Associates

Can any of the company-specific risk be diversified away by investing in both Adler Group and CBL Associates 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 Adler Group and CBL Associates into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adler Group SA and CBL Associates Properties, you can compare the effects of market volatilities on Adler Group and CBL Associates 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 Adler Group with a short position of CBL Associates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adler Group and CBL Associates.

Diversification Opportunities for Adler Group and CBL Associates

0.79

Correlation Coefficient

Adler Group  CBL Associates

Poor diversification

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

Pair Corralation between Adler Group and CBL Associates

Assuming the 90 days horizon Adler Group is expected to generate 1.07 times less return on investment than CBL Associates. In addition to that, Adler Group is 1.93 times more volatile than CBL Associates Properties. It trades about 0.09 of its total potential returns per unit of risk. CBL Associates Properties is currently generating about 0.18 per unit of volatility. If you would invest  2,174  in CBL Associates Properties on September 21, 2024 and sell it today you would earn a total of  777.00  from holding CBL Associates Properties or generate 35.74% return on investment over 90 days.

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

Adler Group SA  vs.  CBL Associates Properties

Adler Group SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adler Group SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Adler Group reported solid returns over the last few months and may actually be approaching a breakup point.

CBL Associates Properties

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, CBL Associates disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adler Group and CBL Associates

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

The idea behind Adler Group SA and CBL Associates Properties 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.