Correlation Between Cromwell Property and Australian Unity

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

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

Diversification Opportunities for Cromwell Property and Australian Unity

0.64

Correlation Coefficient

Cromwell Property  Australian Unity

Poor diversification

The 3 months correlation between Cromwell and Australian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cromwell Property Group and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office and Cromwell 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 Cromwell Property Group are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Cromwell Property i.e., Cromwell Property and Australian Unity go up and down completely randomly.

Pair Corralation between Cromwell Property and Australian Unity

Assuming the 90 days trading horizon Cromwell Property Group is expected to under-perform the Australian Unity. In addition to that, Cromwell Property is 2.34 times more volatile than Australian Unity Office. It trades about -0.08 of its total potential returns per unit of risk. Australian Unity Office is currently generating about -0.14 per unit of volatility. If you would invest  115.00  in Australian Unity Office on September 12, 2024 and sell it today you would lose (10.00) from holding Australian Unity Office or give up 8.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Cromwell Property Group  vs.  Australian Unity Office

Cromwell Property

Risk-Adjusted Performance

0 of 100

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 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.

Australian Unity Office

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cromwell Property and Australian Unity

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

The idea behind Cromwell Property Group and Australian Unity Office 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.