Correlation Between Armada Hflr and CS Real

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

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

Diversification Opportunities for Armada Hflr and CS Real

-0.42

Correlation Coefficient

Armada Hflr  CS Real

Very good diversification

The 3 months correlation between Armada and HOSP is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and CS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS Real Estate and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with CS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS Real Estate has no effect on the direction of Armada Hflr i.e., Armada Hflr and CS Real go up and down completely randomly.

Pair Corralation between Armada Hflr and CS Real

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the CS Real. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.01 times less risky than CS Real. The stock trades about -0.26 of its potential returns per unit of risk. The CS Real Estate is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  9,900  in CS Real Estate on September 27, 2024 and sell it today you would earn a total of  550.00  from holding CS Real Estate or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Armada Hflr Pr  vs.  CS Real Estate

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

CS Real Estate

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CS Real Estate are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, CS Real showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and CS Real

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

The idea behind Armada Hflr Pr and CS 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.