Correlation Between CSHG Real and CSHG Renda

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

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

Diversification Opportunities for CSHG Real and CSHG Renda

0.8

Correlation Coefficient

CSHG Real  CSHG Renda

Very poor diversification

The 3 months correlation between CSHG and CSHG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CSHG Real Estate and CSHG Renda Urbana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSHG Renda Urbana and CSHG Real 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 CSHG Real Estate are associated (or correlated) with CSHG Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSHG Renda Urbana has no effect on the direction of CSHG Real i.e., CSHG Real and CSHG Renda go up and down completely randomly.

Pair Corralation between CSHG Real and CSHG Renda

Assuming the 90 days trading horizon CSHG Real Estate is expected to under-perform the CSHG Renda. In addition to that, CSHG Real is 1.5 times more volatile than CSHG Renda Urbana. It trades about -0.11 of its total potential returns per unit of risk. CSHG Renda Urbana is currently generating about -0.01 per unit of volatility. If you would invest  11,325  in CSHG Renda Urbana on October 24, 2024 and sell it today you would lose (25.00) from holding CSHG Renda Urbana or give up 0.22% of portfolio value over 90 days.

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

CSHG Real Estate  vs.  CSHG Renda Urbana

CSHG Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSHG Real Estate has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CSHG Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CSHG Renda Urbana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSHG Renda Urbana has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CSHG Renda is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CSHG Real and CSHG Renda

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

The idea behind CSHG Real Estate and CSHG Renda Urbana 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.