Correlation Between CS Real and SF Sustainable

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

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

Diversification Opportunities for CS Real and SF Sustainable

0.1

Correlation Coefficient

CS Real  SF Sustainable

Average diversification

The 3 months correlation between HOSP and SFPF is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CS Real Estate and SF Sustainable Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SF Sustainable Property and CS 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 CS Real Estate are associated (or correlated) with SF Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SF Sustainable Property has no effect on the direction of CS Real i.e., CS Real and SF Sustainable go up and down completely randomly.

Pair Corralation between CS Real and SF Sustainable

Assuming the 90 days trading horizon CS Real Estate is expected to generate 1.2 times more return on investment than SF Sustainable. However, CS Real is 1.2 times more volatile than SF Sustainable Property. It trades about 0.09 of its potential returns per unit of risk. SF Sustainable Property is currently generating about 0.02 per unit of risk. If you would invest  6,006  in CS Real Estate on September 26, 2024 and sell it today you would earn a total of  4,444  from holding CS Real Estate or generate 73.99% return on investment over 90 days.

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

CS Real Estate  vs.  SF Sustainable Property

CS Real Estate

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CS Real Estate are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, CS Real showed solid returns over the last few months and may actually be approaching a breakup point.

SF Sustainable Property

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SF Sustainable Property are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, SF Sustainable is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CS Real and SF Sustainable

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

The idea behind CS Real Estate and SF Sustainable Property 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..