Correlation Between Redefine Properties and Growthpoint Properties

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

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

Diversification Opportunities for Redefine Properties and Growthpoint Properties

0.6

Correlation Coefficient

Redefine Properties  Growthpoint Properties

Poor diversification

The 3 months correlation between Redefine and Growthpoint is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Redefine Properties and Growthpoint Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growthpoint Properties and Redefine Properties 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 Redefine Properties are associated (or correlated) with Growthpoint Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growthpoint Properties has no effect on the direction of Redefine Properties i.e., Redefine Properties and Growthpoint Properties go up and down completely randomly.

Pair Corralation between Redefine Properties and Growthpoint Properties

Assuming the 90 days trading horizon Redefine Properties is expected to under-perform the Growthpoint Properties. In addition to that, Redefine Properties is 1.41 times more volatile than Growthpoint Properties. It trades about -0.09 of its total potential returns per unit of risk. Growthpoint Properties is currently generating about 0.12 per unit of volatility. If you would invest  129,700  in Growthpoint Properties on September 13, 2024 and sell it today you would earn a total of  3,300  from holding Growthpoint Properties or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Redefine Properties  vs.  Growthpoint Properties

Redefine Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redefine Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Growthpoint Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growthpoint Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Growthpoint Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Redefine Properties and Growthpoint Properties

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

The idea behind Redefine Properties and Growthpoint Properties 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 CEOs Directory module to screen CEOs from public companies around the world.