Correlation Between Cromwell Property and ImagineAR

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

Diversification Opportunities for Cromwell Property and ImagineAR

0.69

Correlation Coefficient

Cromwell Property  ImagineAR

Poor diversification

The 3 months correlation between Cromwell and ImagineAR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cromwell Property Group and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR 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 ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of Cromwell Property i.e., Cromwell Property and ImagineAR go up and down completely randomly.

Pair Corralation between Cromwell Property and ImagineAR

Assuming the 90 days horizon Cromwell Property is expected to generate 18.8 times less return on investment than ImagineAR. But when comparing it to its historical volatility, Cromwell Property Group is 25.84 times less risky than ImagineAR. It trades about 0.13 of its potential returns per unit of risk. ImagineAR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3.93  in ImagineAR on September 12, 2024 and sell it today you would earn a total of  1.15  from holding ImagineAR or generate 29.26% return on investment over 90 days.

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

Cromwell Property Group  vs.  ImagineAR

Cromwell Property

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cromwell Property Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Cromwell Property is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ImagineAR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ImagineAR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, ImagineAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cromwell Property and ImagineAR

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

The idea behind Cromwell Property Group and ImagineAR 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 CEOs Directory module to screen CEOs from public companies around the world.