Correlation Between Bualuang Office and Prime Office

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

By analyzing existing cross correlation between Bualuang Office Leasehold and Prime Office Leasehold, you can compare the effects of market volatilities on Bualuang Office and Prime Office 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 Bualuang Office with a short position of Prime Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bualuang Office and Prime Office.

Diversification Opportunities for Bualuang Office and Prime Office

0.39

Correlation Coefficient

Bualuang Office  Prime Office

Weak diversification

The 3 months correlation between Bualuang and Prime is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bualuang Office Leasehold and Prime Office Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Office Leasehold and Bualuang 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 Bualuang Office Leasehold are associated (or correlated) with Prime Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Office Leasehold has no effect on the direction of Bualuang Office i.e., Bualuang Office and Prime Office go up and down completely randomly.

Pair Corralation between Bualuang Office and Prime Office

Assuming the 90 days trading horizon Bualuang Office Leasehold is expected to under-perform the Prime Office. In addition to that, Bualuang Office is 14.42 times more volatile than Prime Office Leasehold. It trades about -0.13 of its total potential returns per unit of risk. Prime Office Leasehold is currently generating about 0.1 per unit of volatility. If you would invest  603.00  in Prime Office Leasehold on October 25, 2024 and sell it today you would earn a total of  32.00  from holding Prime Office Leasehold or generate 5.31% return on investment over 90 days.

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

Bualuang Office Leasehold  vs.  Prime Office Leasehold

Bualuang Office Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bualuang Office Leasehold 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Prime Office Leasehold

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Office Leasehold are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent forward-looking signals, Prime Office is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bualuang Office and Prime Office

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

The idea behind Bualuang Office Leasehold and Prime Office Leasehold 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.