Correlation Between Covivio SA and Stockland

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

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

Diversification Opportunities for Covivio SA and Stockland

0.64

Correlation Coefficient

Covivio SA  Stockland

Poor diversification

The 3 months correlation between Covivio and Stockland is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Covivio SA and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland and Covivio SA 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 Covivio SA are associated (or correlated) with Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of Covivio SA i.e., Covivio SA and Stockland go up and down completely randomly.

Pair Corralation between Covivio SA and Stockland

Assuming the 90 days horizon Covivio SA is expected to under-perform the Stockland. But the stock apears to be less risky and, when comparing its historical volatility, Covivio SA is 1.18 times less risky than Stockland. The stock trades about -0.03 of its potential returns per unit of risk. The Stockland is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  290.00  in Stockland on December 10, 2024 and sell it today you would lose (10.00) from holding Stockland or give up 3.45% of portfolio value over 90 days.

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

Covivio SA  vs.  Stockland

Covivio SA

Risk-Adjusted Performance

Very Weak

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

Stockland

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Covivio SA and Stockland

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

The idea behind Covivio SA and Stockland 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.