Correlation Between PRS Reit and Hammerson PLC

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

By analyzing existing cross correlation between PRS Reit PLC and Hammerson PLC, you can compare the effects of market volatilities on PRS Reit and Hammerson PLC 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 PRS Reit with a short position of Hammerson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRS Reit and Hammerson PLC.

Diversification Opportunities for PRS Reit and Hammerson PLC

0.04

Correlation Coefficient

PRS Reit  Hammerson PLC

Significant diversification

The 3 months correlation between PRS and Hammerson is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding PRS Reit PLC and Hammerson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson PLC and PRS Reit 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 PRS Reit PLC are associated (or correlated) with Hammerson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson PLC has no effect on the direction of PRS Reit i.e., PRS Reit and Hammerson PLC go up and down completely randomly.

Pair Corralation between PRS Reit and Hammerson PLC

Assuming the 90 days trading horizon PRS Reit PLC is expected to generate 0.97 times more return on investment than Hammerson PLC. However, PRS Reit PLC is 1.03 times less risky than Hammerson PLC. It trades about 0.14 of its potential returns per unit of risk. Hammerson PLC is currently generating about 0.04 per unit of risk. If you would invest  9,310  in PRS Reit PLC on September 4, 2024 and sell it today you would earn a total of  1,250  from holding PRS Reit PLC or generate 13.43% return on investment over 90 days.

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

PRS Reit PLC  vs.  Hammerson PLC

PRS Reit PLC

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PRS Reit PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PRS Reit unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hammerson PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hammerson PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hammerson PLC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PRS Reit and Hammerson PLC

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

The idea behind PRS Reit PLC and Hammerson PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.