Correlation Between Real Estate and ASA RETROFITS

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

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

Diversification Opportunities for Real Estate and ASA RETROFITS

-0.25

Correlation Coefficient

Real Estate  ASA RETROFITS

Very good diversification

The 3 months correlation between Real and ASA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Investment and ASA RETROFITS I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASA RETROFITS I and Real Estate 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 Real Estate Investment are associated (or correlated) with ASA RETROFITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASA RETROFITS I has no effect on the direction of Real Estate i.e., Real Estate and ASA RETROFITS go up and down completely randomly.

Pair Corralation between Real Estate and ASA RETROFITS

Assuming the 90 days trading horizon Real Estate Investment is expected to generate 64.03 times more return on investment than ASA RETROFITS. However, Real Estate is 64.03 times more volatile than ASA RETROFITS I. It trades about 0.08 of its potential returns per unit of risk. ASA RETROFITS I is currently generating about 0.02 per unit of risk. If you would invest  743.00  in Real Estate Investment on October 11, 2024 and sell it today you would earn a total of  35.00  from holding Real Estate Investment or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.91%
Values	Daily Returns

Real Estate Investment  vs.  ASA RETROFITS I

Real Estate Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

ASA RETROFITS I

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASA RETROFITS I are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, ASA RETROFITS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Real Estate and ASA RETROFITS

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

The idea behind Real Estate Investment and ASA RETROFITS I 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.