Correlation Between Simon Property and Alchemy Investments

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

By analyzing existing cross correlation between Simon Property Group and Alchemy Investments Acquisition, you can compare the effects of market volatilities on Simon Property and Alchemy Investments 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 Simon Property with a short position of Alchemy Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Alchemy Investments.

Diversification Opportunities for Simon Property and Alchemy Investments

0.29

Correlation Coefficient

Simon Property  Alchemy Investments

Modest diversification

The 3 months correlation between Simon and Alchemy is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Alchemy Investments Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchemy Investments and Simon 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 Simon Property Group are associated (or correlated) with Alchemy Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchemy Investments has no effect on the direction of Simon Property i.e., Simon Property and Alchemy Investments go up and down completely randomly.

Pair Corralation between Simon Property and Alchemy Investments

Considering the 90-day investment horizon Simon Property Group is expected to generate 0.63 times more return on investment than Alchemy Investments. However, Simon Property Group is 1.59 times less risky than Alchemy Investments. It trades about 0.15 of its potential returns per unit of risk. Alchemy Investments Acquisition is currently generating about 0.01 per unit of risk. If you would invest  16,302  in Simon Property Group on September 16, 2024 and sell it today you would earn a total of  1,658  from holding Simon Property Group or generate 10.17% return on investment over 90 days.

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

Simon Property Group  vs.  Alchemy Investments Acquisitio

Simon Property Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Simon Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alchemy Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alchemy Investments Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alchemy Investments is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Simon Property and Alchemy Investments

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

The idea behind Simon Property Group and Alchemy Investments Acquisition 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 Global Correlations module to find global opportunities by holding instruments from different markets.