Correlation Between Pro Real and BSR Real

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

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

Diversification Opportunities for Pro Real and BSR Real

0.26

Correlation Coefficient

Pro Real  BSR Real

Modest diversification

The 3 months correlation between Pro and BSR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pro Real Estate and BSR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSR Real Estate and Pro 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 Pro Real Estate are associated (or correlated) with BSR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSR Real Estate has no effect on the direction of Pro Real i.e., Pro Real and BSR Real go up and down completely randomly.

Pair Corralation between Pro Real and BSR Real

Assuming the 90 days trading horizon Pro Real Estate is expected to generate 1.18 times more return on investment than BSR Real. However, Pro Real is 1.18 times more volatile than BSR Real Estate. It trades about 0.04 of its potential returns per unit of risk. BSR Real Estate is currently generating about 0.04 per unit of risk. If you would invest  537.00  in Pro Real Estate on September 5, 2024 and sell it today you would earn a total of  15.00  from holding Pro Real Estate or generate 2.79% return on investment over 90 days.

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

Pro Real Estate  vs.  BSR Real Estate

Pro Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pro Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BSR Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BSR Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, BSR Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pro Real and BSR Real

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

The idea behind Pro Real Estate and BSR Real Estate 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.