Correlation Between CA Sales and Emira Property

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

By analyzing existing cross correlation between CA Sales Holdings and Emira Property, you can compare the effects of market volatilities on CA Sales and Emira Property 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 CA Sales with a short position of Emira Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and Emira Property.

Diversification Opportunities for CA Sales and Emira Property

0.07

Correlation Coefficient

CA Sales  Emira Property

Significant diversification

The 3 months correlation between CAA and Emira is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and Emira Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emira Property and CA Sales 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 CA Sales Holdings are associated (or correlated) with Emira Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emira Property has no effect on the direction of CA Sales i.e., CA Sales and Emira Property go up and down completely randomly.

Pair Corralation between CA Sales and Emira Property

Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 1.24 times more return on investment than Emira Property. However, CA Sales is 1.24 times more volatile than Emira Property. It trades about 0.08 of its potential returns per unit of risk. Emira Property is currently generating about 0.05 per unit of risk. If you would invest  93,341  in CA Sales Holdings on December 3, 2024 and sell it today you would earn a total of  65,559  from holding CA Sales Holdings or generate 70.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

CA Sales Holdings  vs.  Emira Property

CA Sales Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CA Sales Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, CA Sales is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Emira Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emira Property has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Emira Property is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CA Sales and Emira Property

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

The idea behind CA Sales Holdings and Emira Property 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.