Correlation Between Growthpoint Properties and Deneb Investments

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

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

Diversification Opportunities for Growthpoint Properties and Deneb Investments

0.16

Correlation Coefficient

Growthpoint Properties  Deneb Investments

Average diversification

The 3 months correlation between Growthpoint and Deneb is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Deneb Investments go up and down completely randomly.

Pair Corralation between Growthpoint Properties and Deneb Investments

Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 0.55 times more return on investment than Deneb Investments. However, Growthpoint Properties is 1.81 times less risky than Deneb Investments. It trades about -0.2 of its potential returns per unit of risk. Deneb Investments is currently generating about -0.25 per unit of risk. If you would invest  133,700  in Growthpoint Properties on October 8, 2024 and sell it today you would lose (4,100) from holding Growthpoint Properties or give up 3.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Growthpoint Properties  vs.  Deneb Investments

Growthpoint Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growthpoint Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Growthpoint Properties is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Deneb Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deneb Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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 Growthpoint Properties and Deneb Investments

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

The idea behind Growthpoint Properties and Deneb Investments 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.