Correlation Between Reit 1 and Mega Or

Can any of the company-specific risk be diversified away by investing in both Reit 1 and Mega Or 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 Reit 1 and Mega Or into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Reit 1 and Mega Or, you can compare the effects of market volatilities on Reit 1 and Mega Or 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 Reit 1 with a short position of Mega Or. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reit 1 and Mega Or.

Diversification Opportunities for Reit 1 and Mega Or

0.72

Correlation Coefficient

Reit 1  Mega Or

Poor diversification

The 3 months correlation between Reit and Mega is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Reit 1 and Mega Or in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Or and Reit 1 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 Reit 1 are associated (or correlated) with Mega Or. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Or has no effect on the direction of Reit 1 i.e., Reit 1 and Mega Or go up and down completely randomly.

Pair Corralation between Reit 1 and Mega Or

Assuming the 90 days trading horizon Reit 1 is expected to under-perform the Mega Or. But the stock apears to be less risky and, when comparing its historical volatility, Reit 1 is 1.19 times less risky than Mega Or. The stock trades about -0.06 of its potential returns per unit of risk. The Mega Or is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,105,393  in Mega Or on December 29, 2024 and sell it today you would lose (36,393) from holding Mega Or or give up 3.29% of portfolio value over 90 days.

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

Reit 1  vs.  Mega Or

Reit 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reit 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Mega Or

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mega Or has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mega Or is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reit 1 and Mega Or

The main advantage of trading using opposite Reit 1 and Mega Or positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reit 1 position performs unexpectedly, Mega Or 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 Mega Or will offset losses from the drop in Mega Or's long position.

The idea behind Reit 1 and Mega Or 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.