Correlation Between Carindale Property and Cromwell Property

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

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

Diversification Opportunities for Carindale Property and Cromwell Property

-0.25

Correlation Coefficient

Carindale Property  Cromwell Property

Very good diversification

The 3 months correlation between Carindale and Cromwell is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Carindale Property Trust and Cromwell Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cromwell Property and Carindale Property 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 Carindale Property Trust are associated (or correlated) with Cromwell Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cromwell Property has no effect on the direction of Carindale Property i.e., Carindale Property and Cromwell Property go up and down completely randomly.

Pair Corralation between Carindale Property and Cromwell Property

Assuming the 90 days trading horizon Carindale Property Trust is expected to under-perform the Cromwell Property. But the stock apears to be less risky and, when comparing its historical volatility, Carindale Property Trust is 1.71 times less risky than Cromwell Property. The stock trades about -0.01 of its potential returns per unit of risk. The Cromwell Property Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Cromwell Property Group on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Cromwell Property Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Carindale Property Trust  vs.  Cromwell Property Group

Carindale Property Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carindale Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Carindale Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cromwell Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cromwell Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cromwell Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Carindale Property and Cromwell Property

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

The idea behind Carindale Property Trust and Cromwell Property Group 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.