Correlation Between Revitus Property and CAFCA

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

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

Diversification Opportunities for Revitus Property and CAFCA

-0.27

Correlation Coefficient

Revitus Property  CAFCA

Very good diversification

The 3 months correlation between Revitus and CAFCA is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Revitus Property Opportunities and CAFCA LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAFCA LIMITED and Revitus Property 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 Revitus Property Opportunities are associated (or correlated) with CAFCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAFCA LIMITED has no effect on the direction of Revitus Property i.e., Revitus Property and CAFCA go up and down completely randomly.

Pair Corralation between Revitus Property and CAFCA

Assuming the 90 days trading horizon Revitus Property is expected to generate 2.0 times less return on investment than CAFCA. In addition to that, Revitus Property is 1.14 times more volatile than CAFCA LIMITED. It trades about 0.05 of its total potential returns per unit of risk. CAFCA LIMITED is currently generating about 0.12 per unit of volatility. If you would invest  8,788,000  in CAFCA LIMITED on September 28, 2024 and sell it today you would lose (8,583,000) from holding CAFCA LIMITED or give up 97.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.84%
Values	Daily Returns

Revitus Property Opportunities  vs.  CAFCA LIMITED

Revitus Property Opp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Revitus Property Opportunities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Revitus Property demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CAFCA LIMITED

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAFCA LIMITED are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, CAFCA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Revitus Property and CAFCA

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

The idea behind Revitus Property Opportunities and CAFCA 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.