Correlation Between Asia Pptys and CBL Associates

Can any of the company-specific risk be diversified away by investing in both Asia Pptys and CBL Associates 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 Asia Pptys and CBL Associates into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Pptys and CBL Associates Properties, you can compare the effects of market volatilities on Asia Pptys and CBL Associates 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 Asia Pptys with a short position of CBL Associates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Pptys and CBL Associates.

Diversification Opportunities for Asia Pptys and CBL Associates

-0.54

Correlation Coefficient

Asia Pptys  CBL Associates

Excellent diversification

The 3 months correlation between Asia and CBL is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pptys and CBL Associates Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL Associates Properties and Asia Pptys 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 Asia Pptys are associated (or correlated) with CBL Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL Associates Properties has no effect on the direction of Asia Pptys i.e., Asia Pptys and CBL Associates go up and down completely randomly.

Pair Corralation between Asia Pptys and CBL Associates

Given the investment horizon of 90 days Asia Pptys is expected to generate 24.05 times more return on investment than CBL Associates. However, Asia Pptys is 24.05 times more volatile than CBL Associates Properties. It trades about 0.11 of its potential returns per unit of risk. CBL Associates Properties is currently generating about 0.15 per unit of risk. If you would invest  5.00  in Asia Pptys on September 21, 2024 and sell it today you would lose (1.30) from holding Asia Pptys or give up 26.0% of portfolio value over 90 days.

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

Asia Pptys  vs.  CBL Associates Properties

Asia Pptys

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pptys are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Asia Pptys showed solid returns over the last few months and may actually be approaching a breakup point.

CBL Associates Properties

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, CBL Associates disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Pptys and CBL Associates

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

The idea behind Asia Pptys and CBL Associates Properties 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.