Correlation Between Care Property and Cofinimmo

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

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

Diversification Opportunities for Care Property and Cofinimmo

0.92

Correlation Coefficient

Care Property  Cofinimmo

Almost no diversification

The 3 months correlation between Care and Cofinimmo is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Care Property Invest and Cofinimmo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cofinimmo SA and Care Property 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 Care Property Invest are associated (or correlated) with Cofinimmo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cofinimmo SA has no effect on the direction of Care Property i.e., Care Property and Cofinimmo go up and down completely randomly.

Pair Corralation between Care Property and Cofinimmo

Assuming the 90 days trading horizon Care Property Invest is expected to under-perform the Cofinimmo. In addition to that, Care Property is 1.09 times more volatile than Cofinimmo SA. It trades about -0.18 of its total potential returns per unit of risk. Cofinimmo SA is currently generating about -0.11 per unit of volatility. If you would invest  6,205  in Cofinimmo SA on September 3, 2024 and sell it today you would lose (525.00) from holding Cofinimmo SA or give up 8.46% of portfolio value over 90 days.

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

Care Property Invest  vs.  Cofinimmo SA

Care Property Invest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Care Property Invest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cofinimmo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cofinimmo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Care Property and Cofinimmo

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

The idea behind Care Property Invest and Cofinimmo SA 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.