Correlation Between CSHG Real and Rossi Residencial

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

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

Diversification Opportunities for CSHG Real and Rossi Residencial

0.82

Correlation Coefficient

CSHG Real  Rossi Residencial

Very poor diversification

The 3 months correlation between CSHG and Rossi is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CSHG Real Estate and Rossi Residencial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rossi Residencial and CSHG Real 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 CSHG Real Estate are associated (or correlated) with Rossi Residencial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rossi Residencial has no effect on the direction of CSHG Real i.e., CSHG Real and Rossi Residencial go up and down completely randomly.

Pair Corralation between CSHG Real and Rossi Residencial

Assuming the 90 days trading horizon CSHG Real Estate is expected to generate 0.28 times more return on investment than Rossi Residencial. However, CSHG Real Estate is 3.61 times less risky than Rossi Residencial. It trades about -0.16 of its potential returns per unit of risk. Rossi Residencial SA is currently generating about -0.07 per unit of risk. If you would invest  11,197  in CSHG Real Estate on September 1, 2024 and sell it today you would lose (967.00) from holding CSHG Real Estate or give up 8.64% of portfolio value over 90 days.

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

CSHG Real Estate  vs.  Rossi Residencial SA

CSHG Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSHG Real Estate has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Rossi Residencial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rossi Residencial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CSHG Real and Rossi Residencial

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

The idea behind CSHG Real Estate and Rossi Residencial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.