Correlation Between Redefine Properties and Emira Property

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

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

Diversification Opportunities for Redefine Properties and Emira Property

0.48

Correlation Coefficient

Redefine Properties  Emira Property

Very weak diversification

The 3 months correlation between Redefine and Emira is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Redefine Properties and Emira Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emira Property and Redefine Properties 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 Redefine Properties are associated (or correlated) with Emira Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emira Property has no effect on the direction of Redefine Properties i.e., Redefine Properties and Emira Property go up and down completely randomly.

Pair Corralation between Redefine Properties and Emira Property

Assuming the 90 days trading horizon Redefine Properties is expected to generate 0.95 times more return on investment than Emira Property. However, Redefine Properties is 1.06 times less risky than Emira Property. It trades about 0.05 of its potential returns per unit of risk. Emira Property is currently generating about 0.04 per unit of risk. If you would invest  43,500  in Redefine Properties on December 4, 2024 and sell it today you would earn a total of  500.00  from holding Redefine Properties or generate 1.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Redefine Properties  vs.  Emira Property

Redefine Properties

Risk-Adjusted Performance

Very Weak

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

Emira Property

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Redefine Properties and Emira Property

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

The idea behind Redefine Properties and Emira Property 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.