Correlation Between Computershare and Centuria Industrial

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

By analyzing existing cross correlation between Computershare and Centuria Industrial Reit, you can compare the effects of market volatilities on Computershare and Centuria Industrial 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 Computershare with a short position of Centuria Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computershare and Centuria Industrial.

Diversification Opportunities for Computershare and Centuria Industrial

-0.82

Correlation Coefficient

Computershare  Centuria Industrial

Pay attention - limited upside

The 3 months correlation between Computershare and Centuria is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Computershare and Centuria Industrial Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centuria Industrial Reit and Computershare 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 Computershare are associated (or correlated) with Centuria Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centuria Industrial Reit has no effect on the direction of Computershare i.e., Computershare and Centuria Industrial go up and down completely randomly.

Pair Corralation between Computershare and Centuria Industrial

Assuming the 90 days trading horizon Computershare is expected to generate 1.89 times more return on investment than Centuria Industrial. However, Computershare is 1.89 times more volatile than Centuria Industrial Reit. It trades about 0.16 of its potential returns per unit of risk. Centuria Industrial Reit is currently generating about -0.08 per unit of risk. If you would invest  2,826  in Computershare on September 4, 2024 and sell it today you would earn a total of  462.00  from holding Computershare or generate 16.35% return on investment over 90 days.

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

Computershare  vs.  Centuria Industrial Reit

Computershare

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Computershare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centuria Industrial Reit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centuria Industrial Reit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Centuria Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Computershare and Centuria Industrial

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

The idea behind Computershare and Centuria Industrial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.