Correlation Between Ready Capital and Sa Real

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

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

Diversification Opportunities for Ready Capital and Sa Real

0.6

Correlation Coefficient

Ready Capital  Sa Real

Poor diversification

The 3 months correlation between Ready and SAREX is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Sa Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sa Real Estate and Ready Capital 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 Ready Capital Corp are associated (or correlated) with Sa Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sa Real Estate has no effect on the direction of Ready Capital i.e., Ready Capital and Sa Real go up and down completely randomly.

Pair Corralation between Ready Capital and Sa Real

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to generate 2.16 times more return on investment than Sa Real. However, Ready Capital is 2.16 times more volatile than Sa Real Estate. It trades about -0.01 of its potential returns per unit of risk. Sa Real Estate is currently generating about -0.09 per unit of risk. If you would invest  750.00  in Ready Capital Corp on September 14, 2024 and sell it today you would lose (16.00) from holding Ready Capital Corp or give up 2.13% of portfolio value over 90 days.

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

Ready Capital Corp  vs.  Sa Real Estate

Ready Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ready Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ready Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sa Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sa Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Sa 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 Ready Capital and Sa Real

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

The idea behind Ready Capital Corp and Sa 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.