Correlation Between Centuria Industrial and Embark Education

Can any of the company-specific risk be diversified away by investing in both Centuria Industrial and Embark Education 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 Embark Education 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 Embark Education Group, you can compare the effects of market volatilities on Centuria Industrial and Embark Education 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 Embark Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centuria Industrial and Embark Education.

Diversification Opportunities for Centuria Industrial and Embark Education

0.54

Correlation Coefficient

Centuria Industrial  Embark Education

Very weak diversification

The 3 months correlation between Centuria and Embark is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Centuria Industrial Reit and Embark Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Education 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 Embark Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Education has no effect on the direction of Centuria Industrial i.e., Centuria Industrial and Embark Education go up and down completely randomly.

Pair Corralation between Centuria Industrial and Embark Education

Assuming the 90 days trading horizon Centuria Industrial Reit is expected to generate 0.85 times more return on investment than Embark Education. However, Centuria Industrial Reit is 1.17 times less risky than Embark Education. It trades about 0.08 of its potential returns per unit of risk. Embark Education Group is currently generating about 0.01 per unit of risk. If you would invest  283.00  in Centuria Industrial Reit on December 23, 2024 and sell it today you would earn a total of  15.00  from holding Centuria Industrial Reit or generate 5.3% return on investment over 90 days.

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

Centuria Industrial Reit  vs.  Embark Education Group

Centuria Industrial Reit

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centuria Industrial Reit are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Centuria Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Embark Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embark Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Embark Education 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 Embark Education

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

The idea behind Centuria Industrial Reit and Embark Education 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.