Correlation Between Retail Estates and Inclusio Sca

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

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

Diversification Opportunities for Retail Estates and Inclusio Sca

-0.18

Correlation Coefficient

Retail Estates  Inclusio Sca

Good diversification

The 3 months correlation between Retail and Inclusio is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates and Inclusio Sca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inclusio Sca and Retail Estates 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 Retail Estates are associated (or correlated) with Inclusio Sca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inclusio Sca has no effect on the direction of Retail Estates i.e., Retail Estates and Inclusio Sca go up and down completely randomly.

Pair Corralation between Retail Estates and Inclusio Sca

Assuming the 90 days trading horizon Retail Estates is expected to generate 3.38 times less return on investment than Inclusio Sca. But when comparing it to its historical volatility, Retail Estates is 1.35 times less risky than Inclusio Sca. It trades about 0.03 of its potential returns per unit of risk. Inclusio Sca is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,330  in Inclusio Sca on December 30, 2024 and sell it today you would earn a total of  85.00  from holding Inclusio Sca or generate 6.39% return on investment over 90 days.

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

Retail Estates   vs.  Inclusio Sca

Retail Estates

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Estates are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Retail Estates is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Inclusio Sca

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inclusio Sca are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Inclusio Sca may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Retail Estates and Inclusio Sca

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

The idea behind Retail Estates and Inclusio Sca 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.