Correlation Between Electricity Generating and Frasers Property

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

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

Diversification Opportunities for Electricity Generating and Frasers Property

-0.27

Correlation Coefficient

Electricity Generating  Frasers Property

Very good diversification

The 3 months correlation between Electricity and Frasers is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Electricity Generating Public and Frasers Property Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frasers Property Public and Electricity Generating 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 Electricity Generating Public are associated (or correlated) with Frasers Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frasers Property Public has no effect on the direction of Electricity Generating i.e., Electricity Generating and Frasers Property go up and down completely randomly.

Pair Corralation between Electricity Generating and Frasers Property

Assuming the 90 days trading horizon Electricity Generating Public is expected to generate 0.93 times more return on investment than Frasers Property. However, Electricity Generating Public is 1.08 times less risky than Frasers Property. It trades about 0.16 of its potential returns per unit of risk. Frasers Property Public is currently generating about -0.11 per unit of risk. If you would invest  10,763  in Electricity Generating Public on September 4, 2024 and sell it today you would earn a total of  1,687  from holding Electricity Generating Public or generate 15.67% return on investment over 90 days.

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

Electricity Generating Public  vs.  Frasers Property Public

Electricity Generating

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electricity Generating Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Electricity Generating disclosed solid returns over the last few months and may actually be approaching a breakup point.

Frasers Property Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frasers Property Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Electricity Generating and Frasers Property

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

The idea behind Electricity Generating Public and Frasers Property Public 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.