Correlation Between Care Property and Retail Estates

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

By analyzing existing cross correlation between Care Property Invest and Retail Estates , you can compare the effects of market volatilities on Care Property and Retail Estates 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 Care Property with a short position of Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Care Property and Retail Estates.

Diversification Opportunities for Care Property and Retail Estates

0.74

Correlation Coefficient

Care Property  Retail Estates

Poor diversification

The 3 months correlation between Care and Retail is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Care Property Invest and Retail Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates and Care 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 Care Property Invest are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates has no effect on the direction of Care Property i.e., Care Property and Retail Estates go up and down completely randomly.

Pair Corralation between Care Property and Retail Estates

Assuming the 90 days trading horizon Care Property Invest is expected to under-perform the Retail Estates. In addition to that, Care Property is 1.58 times more volatile than Retail Estates . It trades about -0.06 of its total potential returns per unit of risk. Retail Estates is currently generating about -0.01 per unit of volatility. If you would invest  5,930  in Retail Estates on December 4, 2024 and sell it today you would lose (40.00) from holding Retail Estates or give up 0.67% of portfolio value over 90 days.

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

Care Property Invest  vs.  Retail Estates

Care Property Invest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Care Property Invest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Care Property is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Retail Estates

Risk-Adjusted Performance

Very Weak

Over the last 90 days Retail Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Retail Estates is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Care Property and Retail Estates

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

The idea behind Care Property Invest and Retail Estates 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.