Correlation Between Inmobiliaria Colonial and Alstria Office

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

By analyzing existing cross correlation between Inmobiliaria Colonial SOCIMI and alstria office REIT AG, you can compare the effects of market volatilities on Inmobiliaria Colonial and Alstria Office 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 Inmobiliaria Colonial with a short position of Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inmobiliaria Colonial and Alstria Office.

Diversification Opportunities for Inmobiliaria Colonial and Alstria Office

-0.88

Correlation Coefficient

Inmobiliaria Colonial  Alstria Office

Pay attention - limited upside

The 3 months correlation between Inmobiliaria and Alstria is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Inmobiliaria Colonial SOCIMI and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT and Inmobiliaria Colonial 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 Inmobiliaria Colonial SOCIMI are associated (or correlated) with Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of Inmobiliaria Colonial i.e., Inmobiliaria Colonial and Alstria Office go up and down completely randomly.

Pair Corralation between Inmobiliaria Colonial and Alstria Office

Assuming the 90 days trading horizon Inmobiliaria Colonial SOCIMI is expected to under-perform the Alstria Office. But the stock apears to be less risky and, when comparing its historical volatility, Inmobiliaria Colonial SOCIMI is 2.04 times less risky than Alstria Office. The stock trades about -0.04 of its potential returns per unit of risk. The alstria office REIT AG is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  351.00  in alstria office REIT AG on September 19, 2024 and sell it today you would earn a total of  413.00  from holding alstria office REIT AG or generate 117.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Inmobiliaria Colonial SOCIMI  vs.  alstria office REIT AG

Inmobiliaria Colonial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inmobiliaria Colonial SOCIMI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

alstria office REIT

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alstria Office reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inmobiliaria Colonial and Alstria Office

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

The idea behind Inmobiliaria Colonial SOCIMI and alstria office REIT AG 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.