Correlation Between CAFCA and Revitus Property

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

By analyzing existing cross correlation between CAFCA LIMITED and Revitus Property Opportunities, you can compare the effects of market volatilities on CAFCA and Revitus Property 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 CAFCA with a short position of Revitus Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAFCA and Revitus Property.

Diversification Opportunities for CAFCA and Revitus Property

-0.27

Correlation Coefficient

CAFCA  Revitus Property

Very good diversification

The 3 months correlation between CAFCA and Revitus is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CAFCA LIMITED and Revitus Property Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revitus Property Opp and CAFCA 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 CAFCA LIMITED are associated (or correlated) with Revitus Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revitus Property Opp has no effect on the direction of CAFCA i.e., CAFCA and Revitus Property go up and down completely randomly.

Pair Corralation between CAFCA and Revitus Property

Assuming the 90 days trading horizon CAFCA LIMITED is expected to generate 0.91 times more return on investment than Revitus Property. However, CAFCA LIMITED is 1.09 times less risky than Revitus Property. It trades about 0.22 of its potential returns per unit of risk. Revitus Property Opportunities is currently generating about 0.09 per unit of risk. If you would invest  140,000  in CAFCA LIMITED on September 28, 2024 and sell it today you would earn a total of  65,000  from holding CAFCA LIMITED or generate 46.43% return on investment over 90 days.

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

CAFCA LIMITED  vs.  Revitus Property Opportunities

CAFCA LIMITED

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAFCA LIMITED are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, CAFCA showed solid returns over the last few months and may actually be approaching a breakup point.

Revitus Property Opp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Revitus Property Opportunities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Revitus Property demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAFCA and Revitus Property

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

The idea behind CAFCA LIMITED and Revitus Property Opportunities 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.