Correlation Between Frasers Property and Property Perfect

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

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

Diversification Opportunities for Frasers Property and Property Perfect

0.49

Correlation Coefficient

Frasers Property  Property Perfect

Very weak diversification

The 3 months correlation between Frasers and Property is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Frasers Property Public and Property Perfect Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Property Perfect Public and Frasers Property 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 Frasers Property Public are associated (or correlated) with Property Perfect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Property Perfect Public has no effect on the direction of Frasers Property i.e., Frasers Property and Property Perfect go up and down completely randomly.

Pair Corralation between Frasers Property and Property Perfect

Assuming the 90 days trading horizon Frasers Property Public is expected to under-perform the Property Perfect. But the stock apears to be less risky and, when comparing its historical volatility, Frasers Property Public is 2.34 times less risky than Property Perfect. The stock trades about -0.09 of its potential returns per unit of risk. The Property Perfect Public is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Property Perfect Public on September 12, 2024 and sell it today you would lose (1.00) from holding Property Perfect Public or give up 5.26% of portfolio value over 90 days.

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

Frasers Property Public  vs.  Property Perfect Public

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.

Property Perfect Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Property Perfect Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Property Perfect is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Frasers Property and Property Perfect

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

The idea behind Frasers Property Public and Property Perfect 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.