Correlation Between BII Railway and CITY OFFICE

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

By analyzing existing cross correlation between BII Railway Transportation and CITY OFFICE REIT, you can compare the effects of market volatilities on BII Railway and CITY 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 BII Railway with a short position of CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and CITY OFFICE.

Diversification Opportunities for BII Railway and CITY OFFICE

-0.11

Correlation Coefficient

BII Railway  CITY OFFICE

Good diversification

The 3 months correlation between BII and CITY is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and CITY OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITY OFFICE REIT and BII Railway 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 BII Railway Transportation are associated (or correlated) with CITY OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITY OFFICE REIT has no effect on the direction of BII Railway i.e., BII Railway and CITY OFFICE go up and down completely randomly.

Pair Corralation between BII Railway and CITY OFFICE

Assuming the 90 days horizon BII Railway Transportation is expected to generate 1.09 times more return on investment than CITY OFFICE. However, BII Railway is 1.09 times more volatile than CITY OFFICE REIT. It trades about 0.01 of its potential returns per unit of risk. CITY OFFICE REIT is currently generating about 0.0 per unit of risk. If you would invest  3.30  in BII Railway Transportation on September 28, 2024 and sell it today you would lose (0.50) from holding BII Railway Transportation or give up 15.15% of portfolio value over 90 days.

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

BII Railway Transportation  vs.  CITY OFFICE REIT

BII Railway Transpor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BII Railway Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BII Railway is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CITY OFFICE REIT

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CITY OFFICE REIT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITY OFFICE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BII Railway and CITY OFFICE

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

The idea behind BII Railway Transportation and CITY OFFICE REIT 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.