Correlation Between Scentre and Carindale Property

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

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

Diversification Opportunities for Scentre and Carindale Property

-0.03

Correlation Coefficient

Scentre  Carindale Property

Good diversification

The 3 months correlation between Scentre and Carindale is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Scentre Group and Carindale Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carindale Property Trust and Scentre 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 Scentre Group are associated (or correlated) with Carindale Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carindale Property Trust has no effect on the direction of Scentre i.e., Scentre and Carindale Property go up and down completely randomly.

Pair Corralation between Scentre and Carindale Property

Assuming the 90 days trading horizon Scentre Group is expected to generate 0.89 times more return on investment than Carindale Property. However, Scentre Group is 1.12 times less risky than Carindale Property. It trades about 0.09 of its potential returns per unit of risk. Carindale Property Trust is currently generating about 0.07 per unit of risk. If you would invest  347.00  in Scentre Group on September 5, 2024 and sell it today you would earn a total of  22.00  from holding Scentre Group or generate 6.34% return on investment over 90 days.

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

Scentre Group  vs.  Carindale Property Trust

Scentre Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scentre Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Scentre may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Carindale Property Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carindale Property Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carindale Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Scentre and Carindale Property

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

The idea behind Scentre Group and Carindale Property Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.