Correlation Between Clicks and Redefine Properties

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

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

Diversification Opportunities for Clicks and Redefine Properties

0.72

Correlation Coefficient

Clicks  Redefine Properties

Poor diversification

The 3 months correlation between Clicks and Redefine is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Clicks and Redefine Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redefine Properties and Clicks 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 Clicks are associated (or correlated) with Redefine Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redefine Properties has no effect on the direction of Clicks i.e., Clicks and Redefine Properties go up and down completely randomly.

Pair Corralation between Clicks and Redefine Properties

Assuming the 90 days trading horizon Clicks is expected to under-perform the Redefine Properties. But the stock apears to be less risky and, when comparing its historical volatility, Clicks is 1.32 times less risky than Redefine Properties. The stock trades about -0.15 of its potential returns per unit of risk. The Redefine Properties is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  46,000  in Redefine Properties on December 23, 2024 and sell it today you would lose (2,900) from holding Redefine Properties or give up 6.3% of portfolio value over 90 days.

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

Clicks  vs.  Redefine Properties

Clicks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clicks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Redefine Properties

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Clicks and Redefine Properties

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

The idea behind Clicks and Redefine Properties 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.