Correlation Between Vicinity Centres and Scentre Group

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

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

Diversification Opportunities for Vicinity Centres and Scentre Group

0.2

Correlation Coefficient

Vicinity Centres  Scentre Group

Modest diversification

The 3 months correlation between Vicinity and Scentre is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Centres Re and Scentre Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scentre Group and Vicinity Centres 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 Vicinity Centres Re are associated (or correlated) with Scentre Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scentre Group has no effect on the direction of Vicinity Centres i.e., Vicinity Centres and Scentre Group go up and down completely randomly.

Pair Corralation between Vicinity Centres and Scentre Group

Assuming the 90 days trading horizon Vicinity Centres Re is expected to generate 0.9 times more return on investment than Scentre Group. However, Vicinity Centres Re is 1.11 times less risky than Scentre Group. It trades about 0.14 of its potential returns per unit of risk. Scentre Group is currently generating about 0.04 per unit of risk. If you would invest  205.00  in Vicinity Centres Re on December 31, 2024 and sell it today you would earn a total of  18.00  from holding Vicinity Centres Re or generate 8.78% return on investment over 90 days.

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

Vicinity Centres Re  vs.  Scentre Group

Vicinity Centres

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vicinity Centres Re are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vicinity Centres may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Scentre Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scentre Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Scentre Group 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 Vicinity Centres and Scentre Group

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

The idea behind Vicinity Centres Re and Scentre Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.