Correlation Between Tokyu REIT and Bayer AG

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

By analyzing existing cross correlation between Tokyu REIT and Bayer AG, you can compare the effects of market volatilities on Tokyu REIT and Bayer AG 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 Tokyu REIT with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyu REIT and Bayer AG.

Diversification Opportunities for Tokyu REIT and Bayer AG

0.0

Correlation Coefficient

Tokyu REIT  Bayer AG

Pay attention - limited upside

The 3 months correlation between Tokyu and Bayer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu REIT and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG and Tokyu REIT 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 Tokyu REIT are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Tokyu REIT i.e., Tokyu REIT and Bayer AG go up and down completely randomly.

Pair Corralation between Tokyu REIT and Bayer AG

If you would invest  1,975  in Bayer AG on December 28, 2024 and sell it today you would earn a total of  476.00  from holding Bayer AG or generate 24.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Tokyu REIT  vs.  Bayer AG

Tokyu REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tokyu REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tokyu REIT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bayer AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bayer AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bayer AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tokyu REIT and Bayer AG

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

The idea behind Tokyu REIT and Bayer AG 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.