Correlation Between SF Sustainable and CS Real

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

By analyzing existing cross correlation between SF Sustainable Property and CS Real Estate, you can compare the effects of market volatilities on SF Sustainable and CS Real 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 SF Sustainable with a short position of CS Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of SF Sustainable and CS Real.

Diversification Opportunities for SF Sustainable and CS Real

0.1

Correlation Coefficient

SF Sustainable  CS Real

Average diversification

The 3 months correlation between SFPF and HOSP is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SF Sustainable Property and CS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS Real Estate and SF Sustainable 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 SF Sustainable Property are associated (or correlated) with CS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS Real Estate has no effect on the direction of SF Sustainable i.e., SF Sustainable and CS Real go up and down completely randomly.

Pair Corralation between SF Sustainable and CS Real

Assuming the 90 days trading horizon SF Sustainable is expected to generate 5.31 times less return on investment than CS Real. But when comparing it to its historical volatility, SF Sustainable Property is 1.2 times less risky than CS Real. It trades about 0.02 of its potential returns per unit of risk. CS Real Estate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,006  in CS Real Estate on September 26, 2024 and sell it today you would earn a total of  4,444  from holding CS Real Estate or generate 73.99% return on investment over 90 days.

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

SF Sustainable Property  vs.  CS Real Estate

SF Sustainable Property

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SF Sustainable Property are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, SF Sustainable is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CS Real Estate

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CS Real Estate are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, CS Real showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SF Sustainable and CS Real

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

The idea behind SF Sustainable Property and CS Real Estate 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.