Correlation Between Bluerock Homes and Alumina

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

By analyzing existing cross correlation between Bluerock Homes Trust and Alumina Limited, you can compare the effects of market volatilities on Bluerock Homes and Alumina 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 Bluerock Homes with a short position of Alumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluerock Homes and Alumina.

Diversification Opportunities for Bluerock Homes and Alumina

0.05

Correlation Coefficient

Bluerock Homes  Alumina

Significant diversification

The 3 months correlation between Bluerock and Alumina is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bluerock Homes Trust and Alumina Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumina Limited and Bluerock Homes 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 Bluerock Homes Trust are associated (or correlated) with Alumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumina Limited has no effect on the direction of Bluerock Homes i.e., Bluerock Homes and Alumina go up and down completely randomly.

Pair Corralation between Bluerock Homes and Alumina

Considering the 90-day investment horizon Bluerock Homes Trust is expected to under-perform the Alumina. But the stock apears to be less risky and, when comparing its historical volatility, Bluerock Homes Trust is 1.02 times less risky than Alumina. The stock trades about -0.08 of its potential returns per unit of risk. The Alumina Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  115.00  in Alumina Limited on September 23, 2024 and sell it today you would lose (4.00) from holding Alumina Limited or give up 3.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	24.41%
Values	Daily Returns

Bluerock Homes Trust  vs.  Alumina Limited

Bluerock Homes Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluerock Homes Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Bluerock Homes is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Alumina Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alumina Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Alumina is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bluerock Homes and Alumina

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

The idea behind Bluerock Homes Trust and Alumina Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.