Correlation Between BII Railway and Alstria Office

Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and Alstria 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 alstria office REIT AG, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Alstria Office.

Diversification Opportunities for BII Railway and Alstria Office

-0.51

Correlation Coefficient

BII Railway  Alstria Office

Excellent diversification

The 3 months correlation between BII and Alstria is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 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 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 BII Railway i.e., BII Railway and Alstria Office go up and down completely randomly.

Pair Corralation between BII Railway and Alstria Office

Assuming the 90 days horizon BII Railway is expected to generate 10.18 times less return on investment than Alstria Office. But when comparing it to its historical volatility, BII Railway Transportation is 1.41 times less risky than Alstria Office. It trades about 0.02 of its potential returns per unit of risk. alstria office REIT AG is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  340.00  in alstria office REIT AG on October 4, 2024 and sell it today you would earn a total of  426.00  from holding alstria office REIT AG or generate 125.29% return on investment over 90 days.

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

BII Railway Transportation  vs.  alstria office REIT AG

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

alstria office REIT

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alstria Office reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BII Railway and Alstria Office

The main advantage of trading using opposite BII Railway and Alstria Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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 BII Railway Transportation 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.