Correlation Between Fair Oaks and TR Property

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

By analyzing existing cross correlation between Fair Oaks Income and TR Property Investment, you can compare the effects of market volatilities on Fair Oaks and TR 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 Fair Oaks with a short position of TR Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and TR Property.

Diversification Opportunities for Fair Oaks and TR Property

-0.5

Correlation Coefficient

Fair Oaks  TR Property

Very good diversification

The 3 months correlation between Fair and TRY is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and TR Property Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TR Property Investment and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with TR Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TR Property Investment has no effect on the direction of Fair Oaks i.e., Fair Oaks and TR Property go up and down completely randomly.

Pair Corralation between Fair Oaks and TR Property

Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.43 times more return on investment than TR Property. However, Fair Oaks Income is 2.31 times less risky than TR Property. It trades about 0.12 of its potential returns per unit of risk. TR Property Investment is currently generating about -0.17 per unit of risk. If you would invest  55.00  in Fair Oaks Income on September 13, 2024 and sell it today you would earn a total of  2.00  from holding Fair Oaks Income or generate 3.64% return on investment over 90 days.

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

Fair Oaks Income  vs.  TR Property Investment

Fair Oaks Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Oaks Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fair Oaks is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

TR Property Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Fair Oaks and TR Property

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

The idea behind Fair Oaks Income and TR Property Investment 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.