Correlation Between Allreal Holding and Fundamenta Real

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

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

Diversification Opportunities for Allreal Holding and Fundamenta Real

0.68

Correlation Coefficient

Allreal Holding  Fundamenta Real

Poor diversification

The 3 months correlation between Allreal and Fundamenta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Allreal Holding and Fundamenta Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamenta Real Estate and Allreal Holding 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 Allreal Holding are associated (or correlated) with Fundamenta Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamenta Real Estate has no effect on the direction of Allreal Holding i.e., Allreal Holding and Fundamenta Real go up and down completely randomly.

Pair Corralation between Allreal Holding and Fundamenta Real

Assuming the 90 days trading horizon Allreal Holding is expected to generate 1.24 times less return on investment than Fundamenta Real. But when comparing it to its historical volatility, Allreal Holding is 1.63 times less risky than Fundamenta Real. It trades about 0.22 of its potential returns per unit of risk. Fundamenta Real Estate is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,590  in Fundamenta Real Estate on October 25, 2024 and sell it today you would earn a total of  90.00  from holding Fundamenta Real Estate or generate 5.66% return on investment over 90 days.

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

Allreal Holding  vs.  Fundamenta Real Estate

Allreal Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allreal Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Allreal Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fundamenta Real Estate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamenta Real Estate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Fundamenta Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Allreal Holding and Fundamenta Real

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

The idea behind Allreal Holding and Fundamenta 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 Global Correlations module to find global opportunities by holding instruments from different markets.