Correlation Between CREMECOMTRSBI and Office Properties

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

By analyzing existing cross correlation between CREMECOMTRSBI DL 001 and Office Properties Income, you can compare the effects of market volatilities on CREMECOMTRSBI and Office Properties 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 CREMECOMTRSBI with a short position of Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREMECOMTRSBI and Office Properties.

Diversification Opportunities for CREMECOMTRSBI and Office Properties

0.64

Correlation Coefficient

CREMECOMTRSBI  Office Properties

Poor diversification

The 3 months correlation between CREMECOMTRSBI and Office is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CREMECOMTRSBI DL 001 and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income and CREMECOMTRSBI 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 CREMECOMTRSBI DL 001 are associated (or correlated) with Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of CREMECOMTRSBI i.e., CREMECOMTRSBI and Office Properties go up and down completely randomly.

Pair Corralation between CREMECOMTRSBI and Office Properties

Assuming the 90 days trading horizon CREMECOMTRSBI DL 001 is expected to generate 8.11 times more return on investment than Office Properties. However, CREMECOMTRSBI is 8.11 times more volatile than Office Properties Income. It trades about 0.08 of its potential returns per unit of risk. Office Properties Income is currently generating about 0.0 per unit of risk. If you would invest  163.00  in CREMECOMTRSBI DL 001 on September 5, 2024 and sell it today you would lose (136.00) from holding CREMECOMTRSBI DL 001 or give up 83.44% of portfolio value over 90 days.

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

CREMECOMTRSBI DL 001  vs.  Office Properties Income

CREMECOMTRSBI DL 001

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CREMECOMTRSBI DL 001 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CREMECOMTRSBI reported solid returns over the last few months and may actually be approaching a breakup point.

Office Properties Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Office Properties Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Office Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CREMECOMTRSBI and Office Properties

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

The idea behind CREMECOMTRSBI DL 001 and Office Properties Income 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.