Correlation Between DFS Furniture and CENTURIA OFFICE

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

By analyzing existing cross correlation between DFS Furniture PLC and CENTURIA OFFICE REIT, you can compare the effects of market volatilities on DFS Furniture and CENTURIA 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 DFS Furniture with a short position of CENTURIA OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and CENTURIA OFFICE.

Diversification Opportunities for DFS Furniture and CENTURIA OFFICE

-0.21

Correlation Coefficient

DFS Furniture  CENTURIA OFFICE

Very good diversification

The 3 months correlation between DFS and CENTURIA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and CENTURIA OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTURIA OFFICE REIT and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with CENTURIA OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTURIA OFFICE REIT has no effect on the direction of DFS Furniture i.e., DFS Furniture and CENTURIA OFFICE go up and down completely randomly.

Pair Corralation between DFS Furniture and CENTURIA OFFICE

Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.1 times more return on investment than CENTURIA OFFICE. However, DFS Furniture is 1.1 times more volatile than CENTURIA OFFICE REIT. It trades about 0.3 of its potential returns per unit of risk. CENTURIA OFFICE REIT is currently generating about 0.17 per unit of risk. If you would invest  152.00  in DFS Furniture PLC on November 29, 2024 and sell it today you would earn a total of  15.00  from holding DFS Furniture PLC or generate 9.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

DFS Furniture PLC  vs.  CENTURIA OFFICE REIT

DFS Furniture PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DFS Furniture is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CENTURIA OFFICE REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CENTURIA OFFICE REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CENTURIA OFFICE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DFS Furniture and CENTURIA OFFICE

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

The idea behind DFS Furniture PLC and CENTURIA OFFICE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.