Correlation Between UBS Property and CS Real

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

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

Diversification Opportunities for UBS Property and CS Real

0.85

Correlation Coefficient

UBS Property  CS Real

Very poor diversification

The 3 months correlation between UBS and SIAT is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding UBS 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 UBS Property 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 UBS 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 UBS Property i.e., UBS Property and CS Real go up and down completely randomly.

Pair Corralation between UBS Property and CS Real

Assuming the 90 days trading horizon UBS Property is expected to generate 1.36 times less return on investment than CS Real. In addition to that, UBS Property is 1.0 times more volatile than CS Real Estate. It trades about 0.03 of its total potential returns per unit of risk. CS Real Estate is currently generating about 0.05 per unit of volatility. If you would invest  20,158  in CS Real Estate on September 26, 2024 and sell it today you would earn a total of  4,242  from holding CS Real Estate or generate 21.04% return on investment over 90 days.

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

UBS Property  vs.  CS Real Estate

UBS Property

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Property are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, UBS Property 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

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CS Real Estate are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, CS Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with UBS Property and CS Real

The main advantage of trading using opposite UBS Property and CS Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Property 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 UBS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.