Correlation Between CREMECOMTRSBI and ARIMA REAL

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

By analyzing existing cross correlation between CREMECOMTRSBI DL 001 and ARIMA REAL ESTSOC, you can compare the effects of market volatilities on CREMECOMTRSBI and ARIMA REAL 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 CREMECOMTRSBI with a short position of ARIMA REAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREMECOMTRSBI and ARIMA REAL.

Diversification Opportunities for CREMECOMTRSBI and ARIMA REAL

0.37

Correlation Coefficient

CREMECOMTRSBI  ARIMA REAL

Weak diversification

The 3 months correlation between CREMECOMTRSBI and ARIMA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CREMECOMTRSBI DL 001 and ARIMA REAL ESTSOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARIMA REAL ESTSOC and CREMECOMTRSBI 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 CREMECOMTRSBI DL 001 are associated (or correlated) with ARIMA REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARIMA REAL ESTSOC has no effect on the direction of CREMECOMTRSBI i.e., CREMECOMTRSBI and ARIMA REAL go up and down completely randomly.

Pair Corralation between CREMECOMTRSBI and ARIMA REAL

Assuming the 90 days trading horizon CREMECOMTRSBI DL 001 is expected to generate 27.73 times more return on investment than ARIMA REAL. However, CREMECOMTRSBI is 27.73 times more volatile than ARIMA REAL ESTSOC. It trades about 0.1 of its potential returns per unit of risk. ARIMA REAL ESTSOC is currently generating about -0.03 per unit of risk. If you would invest  43.00  in CREMECOMTRSBI DL 001 on September 28, 2024 and sell it today you would lose (31.00) from holding CREMECOMTRSBI DL 001 or give up 72.09% of portfolio value over 90 days.

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

CREMECOMTRSBI DL 001  vs.  ARIMA REAL ESTSOC

CREMECOMTRSBI DL 001

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CREMECOMTRSBI DL 001 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CREMECOMTRSBI reported solid returns over the last few months and may actually be approaching a breakup point.

ARIMA REAL ESTSOC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CREMECOMTRSBI and ARIMA REAL

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

The idea behind CREMECOMTRSBI DL 001 and ARIMA REAL ESTSOC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.