Correlation Between Adler Group and Wharf Real

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

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

Diversification Opportunities for Adler Group and Wharf Real

-0.6

Correlation Coefficient

Adler Group  Wharf Real

Excellent diversification

The 3 months correlation between Adler and Wharf is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Adler Group SA and Wharf Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf Real Estate and Adler Group 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 Adler Group SA are associated (or correlated) with Wharf Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Real Estate has no effect on the direction of Adler Group i.e., Adler Group and Wharf Real go up and down completely randomly.

Pair Corralation between Adler Group and Wharf Real

Assuming the 90 days horizon Adler Group SA is expected to generate 0.9 times more return on investment than Wharf Real. However, Adler Group SA is 1.1 times less risky than Wharf Real. It trades about 0.13 of its potential returns per unit of risk. Wharf Real Estate is currently generating about -0.02 per unit of risk. If you would invest  27.00  in Adler Group SA on September 13, 2024 and sell it today you would earn a total of  8.00  from holding Adler Group SA or generate 29.63% return on investment over 90 days.

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

Adler Group SA  vs.  Wharf Real Estate

Adler Group SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adler Group SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Adler Group reported solid returns over the last few months and may actually be approaching a breakup point.

Wharf Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Adler Group and Wharf Real

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

The idea behind Adler Group SA and Wharf 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.