Correlation Between Sella Real and Gold Bond

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

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

Diversification Opportunities for Sella Real and Gold Bond

0.88

Correlation Coefficient

Sella Real  Gold Bond

Very poor diversification

The 3 months correlation between Sella and Gold is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sella Real Estate and The Gold Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bond and Sella Real 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 Sella Real Estate are associated (or correlated) with Gold Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bond has no effect on the direction of Sella Real i.e., Sella Real and Gold Bond go up and down completely randomly.

Pair Corralation between Sella Real and Gold Bond

Assuming the 90 days trading horizon Sella Real Estate is expected to generate 0.62 times more return on investment than Gold Bond. However, Sella Real Estate is 1.6 times less risky than Gold Bond. It trades about 0.34 of its potential returns per unit of risk. The Gold Bond is currently generating about 0.14 per unit of risk. If you would invest  70,257  in Sella Real Estate on September 2, 2024 and sell it today you would earn a total of  19,743  from holding Sella Real Estate or generate 28.1% return on investment over 90 days.

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

Sella Real Estate  vs.  The Gold Bond

Sella Real Estate

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sella Real Estate are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sella Real unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gold Bond

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bond are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bond sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sella Real and Gold Bond

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

The idea behind Sella Real Estate and The Gold Bond 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.