Correlation Between Crombie Real and 404280AM1

Can any of the company-specific risk be diversified away by investing in both Crombie Real and 404280AM1 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 Crombie Real and 404280AM1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crombie Real Estate and HSBC HLDGS PLC, you can compare the effects of market volatilities on Crombie Real and 404280AM1 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 Crombie Real with a short position of 404280AM1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crombie Real and 404280AM1.

Diversification Opportunities for Crombie Real and 404280AM1

0.15

Correlation Coefficient

Crombie Real  404280AM1

Average diversification

The 3 months correlation between Crombie and 404280AM1 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and HSBC HLDGS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC HLDGS PLC and Crombie Real 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 Crombie Real Estate are associated (or correlated) with 404280AM1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC HLDGS PLC has no effect on the direction of Crombie Real i.e., Crombie Real and 404280AM1 go up and down completely randomly.

Pair Corralation between Crombie Real and 404280AM1

Assuming the 90 days horizon Crombie Real Estate is expected to generate 1.43 times more return on investment than 404280AM1. However, Crombie Real is 1.43 times more volatile than HSBC HLDGS PLC. It trades about -0.06 of its potential returns per unit of risk. HSBC HLDGS PLC is currently generating about -0.12 per unit of risk. If you would invest  1,090  in Crombie Real Estate on September 3, 2024 and sell it today you would lose (68.00) from holding Crombie Real Estate or give up 6.24% of portfolio value over 90 days.

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

Crombie Real Estate  vs.  HSBC HLDGS PLC

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

HSBC HLDGS PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HSBC HLDGS PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HSBC HLDGS PLC investors.

Pair Trading with Crombie Real and 404280AM1

The main advantage of trading using opposite Crombie Real and 404280AM1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crombie Real position performs unexpectedly, 404280AM1 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 404280AM1 will offset losses from the drop in 404280AM1's long position.

The idea behind Crombie Real Estate and HSBC HLDGS PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..