Correlation Between Shikun Binui and Reit 1

Can any of the company-specific risk be diversified away by investing in both Shikun Binui and Reit 1 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 Shikun Binui and Reit 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shikun Binui and Reit 1, you can compare the effects of market volatilities on Shikun Binui and Reit 1 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 Shikun Binui with a short position of Reit 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shikun Binui and Reit 1.

Diversification Opportunities for Shikun Binui and Reit 1

0.96

Correlation Coefficient

Shikun Binui  Reit 1

Almost no diversification

The 3 months correlation between Shikun and Reit is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Shikun Binui and Reit 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reit 1 and Shikun Binui 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 Shikun Binui are associated (or correlated) with Reit 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reit 1 has no effect on the direction of Shikun Binui i.e., Shikun Binui and Reit 1 go up and down completely randomly.

Pair Corralation between Shikun Binui and Reit 1

Assuming the 90 days trading horizon Shikun Binui is expected to generate 1.92 times more return on investment than Reit 1. However, Shikun Binui is 1.92 times more volatile than Reit 1. It trades about 0.38 of its potential returns per unit of risk. Reit 1 is currently generating about 0.2 per unit of risk. If you would invest  108,800  in Shikun Binui on September 25, 2024 and sell it today you would earn a total of  30,700  from holding Shikun Binui or generate 28.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	94.44%
Values	Daily Returns

Shikun Binui  vs.  Reit 1

Shikun Binui

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shikun Binui are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shikun Binui sustained solid returns over the last few months and may actually be approaching a breakup point.

Reit 1

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Reit 1 are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Reit 1 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shikun Binui and Reit 1

The main advantage of trading using opposite Shikun Binui and Reit 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shikun Binui position performs unexpectedly, Reit 1 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 Reit 1 will offset losses from the drop in Reit 1's long position.

The idea behind Shikun Binui and Reit 1 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.