Correlation Between CS Real and UBS Property

Can any of the company-specific risk be diversified away by investing in both CS Real and UBS 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 CS Real and UBS Property 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 UBS Property, you can compare the effects of market volatilities on CS Real and UBS 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 CS Real with a short position of UBS Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of CS Real and UBS Property.

Diversification Opportunities for CS Real and UBS Property

0.74

Correlation Coefficient

CS Real  UBS Property

Poor diversification

The 3 months correlation between HOSP and UBS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CS Real Estate and UBS Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS 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 UBS Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Property has no effect on the direction of CS Real i.e., CS Real and UBS Property go up and down completely randomly.

Pair Corralation between CS Real and UBS Property

Assuming the 90 days trading horizon CS Real Estate is expected to generate 1.49 times more return on investment than UBS Property. However, CS Real is 1.49 times more volatile than UBS Property. It trades about 0.09 of its potential returns per unit of risk. UBS Property is currently generating about 0.03 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	Significant
Accuracy	100.0%
Values	Daily Returns

CS Real Estate  vs.  UBS 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.

UBS Property

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Property are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, UBS Property 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 UBS Property

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

The idea behind CS Real Estate and UBS 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.