Correlation Between Inmobiliaria Colonial and Mirvac

Can any of the company-specific risk be diversified away by investing in both Inmobiliaria Colonial and Mirvac 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 Mirvac 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 Mirvac Group, you can compare the effects of market volatilities on Inmobiliaria Colonial and Mirvac 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 Mirvac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inmobiliaria Colonial and Mirvac.

Diversification Opportunities for Inmobiliaria Colonial and Mirvac

0.73

Correlation Coefficient

Inmobiliaria Colonial  Mirvac

Poor diversification

The 3 months correlation between Inmobiliaria and Mirvac is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Inmobiliaria Colonial SOCIMI and Mirvac Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirvac Group 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 Mirvac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirvac Group has no effect on the direction of Inmobiliaria Colonial i.e., Inmobiliaria Colonial and Mirvac go up and down completely randomly.

Pair Corralation between Inmobiliaria Colonial and Mirvac

Assuming the 90 days trading horizon Inmobiliaria Colonial SOCIMI is expected to under-perform the Mirvac. In addition to that, Inmobiliaria Colonial is 1.06 times more volatile than Mirvac Group. It trades about -0.22 of its total potential returns per unit of risk. Mirvac Group is currently generating about -0.17 per unit of volatility. If you would invest  135.00  in Mirvac Group on September 19, 2024 and sell it today you would lose (21.00) from holding Mirvac Group or give up 15.56% of portfolio value over 90 days.

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

Inmobiliaria Colonial SOCIMI  vs.  Mirvac Group

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.

Mirvac Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirvac Group 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 basic 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.

Pair Trading with Inmobiliaria Colonial and Mirvac

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

The idea behind Inmobiliaria Colonial SOCIMI and Mirvac Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.