Correlation Between Retail Estates and QRF SCA

Can any of the company-specific risk be diversified away by investing in both Retail Estates and QRF 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 QRF 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 QRF SCA, you can compare the effects of market volatilities on Retail Estates and QRF 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 QRF SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and QRF SCA.

Diversification Opportunities for Retail Estates and QRF SCA

0.13

Correlation Coefficient

Retail Estates  QRF SCA

Average diversification

The 3 months correlation between Retail and QRF is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates and QRF SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QRF 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 QRF SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QRF SCA has no effect on the direction of Retail Estates i.e., Retail Estates and QRF SCA go up and down completely randomly.

Pair Corralation between Retail Estates and QRF SCA

Assuming the 90 days trading horizon Retail Estates is expected to generate 4.76 times less return on investment than QRF SCA. But when comparing it to its historical volatility, Retail Estates is 1.39 times less risky than QRF SCA. It trades about 0.01 of its potential returns per unit of risk. QRF SCA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,030  in QRF SCA on December 28, 2024 and sell it today you would earn a total of  10.00  from holding QRF SCA or generate 0.97% return on investment over 90 days.

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

Retail Estates   vs.  QRF SCA

Retail Estates

Risk-Adjusted Performance

Very Weak

Over the last 90 days Retail Estates has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

QRF SCA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QRF SCA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, QRF SCA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Retail Estates and QRF SCA

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

The idea behind Retail Estates and QRF 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.