Correlation Between Alpha Divisions and Frasers Property

Can any of the company-specific risk be diversified away by investing in both Alpha Divisions and Frasers Property 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 Alpha Divisions and Frasers Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Divisions PCL and Frasers Property Public, you can compare the effects of market volatilities on Alpha Divisions and Frasers Property 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 Alpha Divisions with a short position of Frasers Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Divisions and Frasers Property.

Diversification Opportunities for Alpha Divisions and Frasers Property

0.64

Correlation Coefficient

Alpha Divisions  Frasers Property

Poor diversification

The 3 months correlation between Alpha and Frasers is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Divisions PCL and Frasers Property Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frasers Property Public and Alpha Divisions 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 Alpha Divisions PCL are associated (or correlated) with Frasers Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frasers Property Public has no effect on the direction of Alpha Divisions i.e., Alpha Divisions and Frasers Property go up and down completely randomly.

Pair Corralation between Alpha Divisions and Frasers Property

Assuming the 90 days trading horizon Alpha Divisions PCL is expected to under-perform the Frasers Property. But the stock apears to be less risky and, when comparing its historical volatility, Alpha Divisions PCL is 1.8 times less risky than Frasers Property. The stock trades about -0.22 of its potential returns per unit of risk. The Frasers Property Public is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,250  in Frasers Property Public on September 24, 2024 and sell it today you would lose (40.00) from holding Frasers Property Public or give up 3.2% of portfolio value over 90 days.

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

Alpha Divisions PCL  vs.  Frasers Property Public

Alpha Divisions PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Divisions PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Frasers Property Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frasers Property Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Frasers Property is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Alpha Divisions and Frasers Property

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

The idea behind Alpha Divisions PCL and Frasers Property Public 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.