Correlation Between BSR Real and Altus Group

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

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

Diversification Opportunities for BSR Real and Altus Group

-0.08

Correlation Coefficient

BSR Real  Altus Group

Good diversification

The 3 months correlation between BSR and Altus is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding BSR Real Estate and Altus Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Group Limited and BSR 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 BSR Real Estate are associated (or correlated) with Altus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Group Limited has no effect on the direction of BSR Real i.e., BSR Real and Altus Group go up and down completely randomly.

Pair Corralation between BSR Real and Altus Group

Assuming the 90 days trading horizon BSR Real Estate is expected to under-perform the Altus Group. But the stock apears to be less risky and, when comparing its historical volatility, BSR Real Estate is 1.13 times less risky than Altus Group. The stock trades about -0.11 of its potential returns per unit of risk. The Altus Group Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,384  in Altus Group Limited on October 1, 2024 and sell it today you would earn a total of  251.00  from holding Altus Group Limited or generate 4.66% return on investment over 90 days.

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

BSR Real Estate  vs.  Altus Group Limited

BSR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Altus Group Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Group Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Altus Group is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BSR Real and Altus Group

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

The idea behind BSR Real Estate and Altus Group Limited 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.