Correlation Between Care Property and Xior Student

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

Diversification Opportunities for Care Property and Xior Student

0.88

Correlation Coefficient

Care Property  Xior Student

Very poor diversification

The 3 months correlation between Care and Xior is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Care Property Invest and Xior Student Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xior Student Housing 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 Xior Student. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xior Student Housing has no effect on the direction of Care Property i.e., Care Property and Xior Student go up and down completely randomly.

Pair Corralation between Care Property and Xior Student

Assuming the 90 days trading horizon Care Property Invest is expected to under-perform the Xior Student. But the stock apears to be less risky and, when comparing its historical volatility, Care Property Invest is 1.08 times less risky than Xior Student. The stock trades about -0.18 of its potential returns per unit of risk. The Xior Student Housing is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,125  in Xior Student Housing on October 21, 2024 and sell it today you would lose (220.00) from holding Xior Student Housing or give up 7.04% of portfolio value over 90 days.

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

Care Property Invest  vs.  Xior Student Housing

Care Property Invest

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xior Student Housing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xior Student Housing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Care Property and Xior Student

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

The idea behind Care Property Invest and Xior Student Housing 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.