Correlation Between Alset Ehome and Brightspire Capital

Can any of the company-specific risk be diversified away by investing in both Alset Ehome and Brightspire Capital 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 Alset Ehome and Brightspire Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alset Ehome International and Brightspire Capital, you can compare the effects of market volatilities on Alset Ehome and Brightspire Capital 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 Alset Ehome with a short position of Brightspire Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alset Ehome and Brightspire Capital.

Diversification Opportunities for Alset Ehome and Brightspire Capital

-0.5

Correlation Coefficient

Alset Ehome  Brightspire Capital

Very good diversification

The 3 months correlation between Alset and Brightspire is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alset Ehome International and Brightspire Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightspire Capital and Alset Ehome 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 Alset Ehome International are associated (or correlated) with Brightspire Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightspire Capital has no effect on the direction of Alset Ehome i.e., Alset Ehome and Brightspire Capital go up and down completely randomly.

Pair Corralation between Alset Ehome and Brightspire Capital

Considering the 90-day investment horizon Alset Ehome International is expected to generate 3.16 times more return on investment than Brightspire Capital. However, Alset Ehome is 3.16 times more volatile than Brightspire Capital. It trades about 0.05 of its potential returns per unit of risk. Brightspire Capital is currently generating about 0.09 per unit of risk. If you would invest  115.00  in Alset Ehome International on September 4, 2024 and sell it today you would earn a total of  3.00  from holding Alset Ehome International or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Alset Ehome International  vs.  Brightspire Capital

Alset Ehome International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alset Ehome International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Alset Ehome demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Brightspire Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brightspire Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Brightspire Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alset Ehome and Brightspire Capital

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

The idea behind Alset Ehome International and Brightspire Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.