Correlation Between Realstone Swiss and CSIF III

Can any of the company-specific risk be diversified away by investing in both Realstone Swiss and CSIF III 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 Realstone Swiss and CSIF III into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Realstone Swiss and CSIF III

0.67

Correlation Coefficient

Realstone Swiss  CSIF III

Poor diversification

The 3 months correlation between Realstone and CSIF is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Realstone Swiss Property and CSIF III Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSIF III Eq and Realstone Swiss 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 Realstone Swiss Property are associated (or correlated) with CSIF III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSIF III Eq has no effect on the direction of Realstone Swiss i.e., Realstone Swiss and CSIF III go up and down completely randomly.

Pair Corralation between Realstone Swiss and CSIF III

Assuming the 90 days trading horizon Realstone Swiss Property is expected to generate 1.26 times more return on investment than CSIF III. However, Realstone Swiss is 1.26 times more volatile than CSIF III Eq. It trades about 0.32 of its potential returns per unit of risk. CSIF III Eq is currently generating about -0.07 per unit of risk. If you would invest  13,900  in Realstone Swiss Property on September 27, 2024 and sell it today you would earn a total of  800.00  from holding Realstone Swiss Property or generate 5.76% return on investment over 90 days.

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

Realstone Swiss Property  vs.  CSIF III Eq

Realstone Swiss Property

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Realstone Swiss Property are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Realstone Swiss may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CSIF III Eq

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSIF III Eq are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, CSIF III is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Realstone Swiss and CSIF III

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

The idea behind Realstone Swiss Property and CSIF III Eq 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.