Correlation Between BTB Real and SmartCentres Real

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

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

Diversification Opportunities for BTB Real and SmartCentres Real

0.53

Correlation Coefficient

BTB Real  SmartCentres Real

Very weak diversification

The 3 months correlation between BTB and SmartCentres is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BTB Real Estate and SmartCentres Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartCentres Real Estate and BTB Real 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 BTB Real Estate are associated (or correlated) with SmartCentres Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartCentres Real Estate has no effect on the direction of BTB Real i.e., BTB Real and SmartCentres Real go up and down completely randomly.

Pair Corralation between BTB Real and SmartCentres Real

Assuming the 90 days trading horizon BTB Real Estate is expected to generate 0.76 times more return on investment than SmartCentres Real. However, BTB Real Estate is 1.32 times less risky than SmartCentres Real. It trades about -0.05 of its potential returns per unit of risk. SmartCentres Real Estate is currently generating about -0.13 per unit of risk. If you would invest  340.00  in BTB Real Estate on October 15, 2024 and sell it today you would lose (3.00) from holding BTB Real Estate or give up 0.88% of portfolio value over 90 days.

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

BTB Real Estate  vs.  SmartCentres Real Estate

BTB Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTB Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SmartCentres Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SmartCentres Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SmartCentres Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BTB Real and SmartCentres Real

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

The idea behind BTB Real Estate and SmartCentres Real Estate 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.