Correlation Between Vicinity Centres and Link Real

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

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

Diversification Opportunities for Vicinity Centres and Link Real

-0.46

Correlation Coefficient

Vicinity Centres  Link Real

Very good diversification

The 3 months correlation between Vicinity and Link is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Centres and Link Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Real Estate and Vicinity Centres 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 Vicinity Centres are associated (or correlated) with Link Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Real Estate has no effect on the direction of Vicinity Centres i.e., Vicinity Centres and Link Real go up and down completely randomly.

Pair Corralation between Vicinity Centres and Link Real

Assuming the 90 days horizon Vicinity Centres is expected to under-perform the Link Real. In addition to that, Vicinity Centres is 1.02 times more volatile than Link Real Estate. It trades about -0.15 of its total potential returns per unit of risk. Link Real Estate is currently generating about -0.09 per unit of volatility. If you would invest  407.00  in Link Real Estate on September 22, 2024 and sell it today you would lose (10.00) from holding Link Real Estate or give up 2.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Vicinity Centres  vs.  Link Real Estate

Vicinity Centres

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicinity Centres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Link Real Estate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Link Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vicinity Centres and Link Real

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

The idea behind Vicinity Centres and Link 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.