Correlation Between Inmobiliaria Colonial and CN DATANG

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

By analyzing existing cross correlation between Inmobiliaria Colonial SOCIMI and CN DATANG C, you can compare the effects of market volatilities on Inmobiliaria Colonial and CN DATANG 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 Inmobiliaria Colonial with a short position of CN DATANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inmobiliaria Colonial and CN DATANG.

Diversification Opportunities for Inmobiliaria Colonial and CN DATANG

-0.44

Correlation Coefficient

Inmobiliaria Colonial  CN DATANG

Very good diversification

The 3 months correlation between Inmobiliaria and DT7 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Inmobiliaria Colonial SOCIMI and CN DATANG C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN DATANG C and Inmobiliaria Colonial 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 Inmobiliaria Colonial SOCIMI are associated (or correlated) with CN DATANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN DATANG C has no effect on the direction of Inmobiliaria Colonial i.e., Inmobiliaria Colonial and CN DATANG go up and down completely randomly.

Pair Corralation between Inmobiliaria Colonial and CN DATANG

Assuming the 90 days trading horizon Inmobiliaria Colonial SOCIMI is expected to generate 0.7 times more return on investment than CN DATANG. However, Inmobiliaria Colonial SOCIMI is 1.43 times less risky than CN DATANG. It trades about 0.13 of its potential returns per unit of risk. CN DATANG C is currently generating about -0.09 per unit of risk. If you would invest  507.00  in Inmobiliaria Colonial SOCIMI on October 25, 2024 and sell it today you would earn a total of  18.00  from holding Inmobiliaria Colonial SOCIMI or generate 3.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Inmobiliaria Colonial SOCIMI  vs.  CN DATANG C

Inmobiliaria Colonial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inmobiliaria Colonial SOCIMI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CN DATANG C

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CN DATANG C are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CN DATANG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Inmobiliaria Colonial and CN DATANG

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

The idea behind Inmobiliaria Colonial SOCIMI and CN DATANG C 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.