Correlation Between Ascendas Real and NIPPON PROLOGIS

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

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

Diversification Opportunities for Ascendas Real and NIPPON PROLOGIS

0.59

Correlation Coefficient

Ascendas Real  NIPPON PROLOGIS

Very weak diversification

The 3 months correlation between Ascendas and NIPPON is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ascendas Real Estate and NIPPON PROLOGIS REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON PROLOGIS REIT and Ascendas 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 Ascendas Real Estate are associated (or correlated) with NIPPON PROLOGIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON PROLOGIS REIT has no effect on the direction of Ascendas Real i.e., Ascendas Real and NIPPON PROLOGIS go up and down completely randomly.

Pair Corralation between Ascendas Real and NIPPON PROLOGIS

Assuming the 90 days horizon Ascendas Real Estate is expected to under-perform the NIPPON PROLOGIS. But the stock apears to be less risky and, when comparing its historical volatility, Ascendas Real Estate is 1.4 times less risky than NIPPON PROLOGIS. The stock trades about -0.23 of its potential returns per unit of risk. The NIPPON PROLOGIS REIT is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  143,000  in NIPPON PROLOGIS REIT on September 4, 2024 and sell it today you would earn a total of  0.00  from holding NIPPON PROLOGIS REIT or generate 0.0% return on investment over 90 days.

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

Ascendas Real Estate  vs.  NIPPON PROLOGIS REIT

Ascendas Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ascendas Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ascendas Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NIPPON PROLOGIS REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIPPON PROLOGIS REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NIPPON PROLOGIS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ascendas Real and NIPPON PROLOGIS

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

The idea behind Ascendas Real Estate and NIPPON PROLOGIS REIT 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.