Correlation Between Capital Metals and Alstria Office

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

By analyzing existing cross correlation between Capital Metals PLC and alstria office REIT AG, you can compare the effects of market volatilities on Capital Metals and Alstria Office 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 Capital Metals with a short position of Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Alstria Office.

Diversification Opportunities for Capital Metals and Alstria Office

-0.23

Correlation Coefficient

Capital Metals  Alstria Office

Very good diversification

The 3 months correlation between Capital and Alstria is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT and Capital Metals 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 Capital Metals PLC are associated (or correlated) with Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of Capital Metals i.e., Capital Metals and Alstria Office go up and down completely randomly.

Pair Corralation between Capital Metals and Alstria Office

Assuming the 90 days trading horizon Capital Metals PLC is expected to generate 0.24 times more return on investment than Alstria Office. However, Capital Metals PLC is 4.22 times less risky than Alstria Office. It trades about -0.33 of its potential returns per unit of risk. alstria office REIT AG is currently generating about -0.18 per unit of risk. If you would invest  190.00  in Capital Metals PLC on October 11, 2024 and sell it today you would lose (20.00) from holding Capital Metals PLC or give up 10.53% of portfolio value over 90 days.

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

Capital Metals PLC  vs.  alstria office REIT AG

Capital Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

alstria office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alstria office REIT AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Alstria Office is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Capital Metals and Alstria Office

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

The idea behind Capital Metals PLC and alstria office REIT AG 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.