Correlation Between Ascendas India and Veris Residential

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

By analyzing existing cross correlation between Ascendas India Trust and Veris Residential, you can compare the effects of market volatilities on Ascendas India and Veris Residential 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 Ascendas India with a short position of Veris Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascendas India and Veris Residential.

Diversification Opportunities for Ascendas India and Veris Residential

-0.4

Correlation Coefficient

Ascendas India  Veris Residential

Very good diversification

The 3 months correlation between Ascendas and Veris is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ascendas India Trust and Veris Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veris Residential and Ascendas India 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 Ascendas India Trust are associated (or correlated) with Veris Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veris Residential has no effect on the direction of Ascendas India i.e., Ascendas India and Veris Residential go up and down completely randomly.

Pair Corralation between Ascendas India and Veris Residential

Assuming the 90 days horizon Ascendas India Trust is expected to generate 1.49 times more return on investment than Veris Residential. However, Ascendas India is 1.49 times more volatile than Veris Residential. It trades about -0.04 of its potential returns per unit of risk. Veris Residential is currently generating about -0.06 per unit of risk. If you would invest  86.00  in Ascendas India Trust on September 20, 2024 and sell it today you would lose (5.00) from holding Ascendas India Trust or give up 5.81% of portfolio value over 90 days.

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

Ascendas India Trust  vs.  Veris Residential

Ascendas India Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Veris Residential

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veris Residential has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Veris Residential is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ascendas India and Veris Residential

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

The idea behind Ascendas India Trust and Veris Residential 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.