Correlation Between Alstria Office and SCIENCE IN

Can any of the company-specific risk be diversified away by investing in both Alstria Office and SCIENCE IN 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 Alstria Office and SCIENCE IN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between alstria office REIT AG and SCIENCE IN SPORT, you can compare the effects of market volatilities on Alstria Office and SCIENCE IN 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 Alstria Office with a short position of SCIENCE IN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and SCIENCE IN.

Diversification Opportunities for Alstria Office and SCIENCE IN

0.71

Correlation Coefficient

Alstria Office  SCIENCE IN

Poor diversification

The 3 months correlation between Alstria and SCIENCE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and SCIENCE IN SPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCIENCE IN SPORT and Alstria Office 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 alstria office REIT AG are associated (or correlated) with SCIENCE IN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCIENCE IN SPORT has no effect on the direction of Alstria Office i.e., Alstria Office and SCIENCE IN go up and down completely randomly.

Pair Corralation between Alstria Office and SCIENCE IN

Assuming the 90 days horizon alstria office REIT AG is expected to generate 1.05 times more return on investment than SCIENCE IN. However, Alstria Office is 1.05 times more volatile than SCIENCE IN SPORT. It trades about 0.18 of its potential returns per unit of risk. SCIENCE IN SPORT is currently generating about 0.1 per unit of risk. If you would invest  340.00  in alstria office REIT AG on October 4, 2024 and sell it today you would earn a total of  426.00  from holding alstria office REIT AG or generate 125.29% return on investment over 90 days.

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

alstria office REIT AG  vs.  SCIENCE IN SPORT

alstria office REIT

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alstria Office reported solid returns over the last few months and may actually be approaching a breakup point.

SCIENCE IN SPORT

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCIENCE IN SPORT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SCIENCE IN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alstria Office and SCIENCE IN

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

The idea behind alstria office REIT AG and SCIENCE IN SPORT 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.