Correlation Between Alset Ehome and Lead Real

Can any of the company-specific risk be diversified away by investing in both Alset Ehome and Lead Real 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 Lead Real 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 Lead Real Estate, you can compare the effects of market volatilities on Alset Ehome and Lead Real 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 Lead Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alset Ehome and Lead Real.

Diversification Opportunities for Alset Ehome and Lead Real

-0.52

Correlation Coefficient

Alset Ehome  Lead Real

Excellent diversification

The 3 months correlation between Alset and Lead is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alset Ehome International and Lead Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lead Real Estate 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 Lead Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lead Real Estate has no effect on the direction of Alset Ehome i.e., Alset Ehome and Lead Real go up and down completely randomly.

Pair Corralation between Alset Ehome and Lead Real

Considering the 90-day investment horizon Alset Ehome International is expected to generate 0.28 times more return on investment than Lead Real. However, Alset Ehome International is 3.58 times less risky than Lead Real. It trades about -0.13 of its potential returns per unit of risk. Lead Real Estate is currently generating about -0.22 per unit of risk. If you would invest  113.00  in Alset Ehome International on September 24, 2024 and sell it today you would lose (19.96) from holding Alset Ehome International or give up 17.66% of portfolio value over 90 days.

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

Alset Ehome International  vs.  Lead Real Estate

Alset Ehome International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alset Ehome International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, Alset Ehome may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lead Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lead Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alset Ehome and Lead Real

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

The idea behind Alset Ehome International and Lead Real Estate 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.