Correlation Between Centuria Industrial and Australia

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

By analyzing existing cross correlation between Centuria Industrial Reit and Australia and New, you can compare the effects of market volatilities on Centuria Industrial and Australia 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 Centuria Industrial with a short position of Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centuria Industrial and Australia.

Diversification Opportunities for Centuria Industrial and Australia

0.04

Correlation Coefficient

Centuria Industrial  Australia

Significant diversification

The 3 months correlation between Centuria and Australia is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Centuria Industrial Reit and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New and Centuria Industrial 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 Centuria Industrial Reit are associated (or correlated) with Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of Centuria Industrial i.e., Centuria Industrial and Australia go up and down completely randomly.

Pair Corralation between Centuria Industrial and Australia

Assuming the 90 days trading horizon Centuria Industrial Reit is expected to under-perform the Australia. But the stock apears to be less risky and, when comparing its historical volatility, Centuria Industrial Reit is 1.39 times less risky than Australia. The stock trades about -0.22 of its potential returns per unit of risk. The Australia and New is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,923  in Australia and New on October 5, 2024 and sell it today you would lose (64.00) from holding Australia and New or give up 2.19% of portfolio value over 90 days.

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

Centuria Industrial Reit  vs.  Australia and New

Centuria Industrial Reit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centuria Industrial Reit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Australia and New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australia and New has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Australia 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 Centuria Industrial and Australia

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

The idea behind Centuria Industrial Reit and Australia and New 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.