Correlation Between CN MODERN and Alstria Office
Can any of the company-specific risk be diversified away by investing in both CN MODERN and Alstria Office 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 CN MODERN and Alstria Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and alstria office REIT AG, you can compare the effects of market volatilities on CN MODERN and Alstria Office 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 CN MODERN with a short position of Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Alstria Office.
Diversification Opportunities for CN MODERN and Alstria Office
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 07M and Alstria is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of CN MODERN i.e., CN MODERN and Alstria Office go up and down completely randomly.
Pair Corralation between CN MODERN and Alstria Office
Assuming the 90 days trading horizon CN MODERN is expected to generate 1.45 times less return on investment than Alstria Office. But when comparing it to its historical volatility, CN MODERN DAIRY is 1.04 times less risky than Alstria Office. It trades about 0.03 of its potential returns per unit of risk. alstria office REIT AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 526.00 in alstria office REIT AG on September 25, 2024 and sell it today you would earn a total of 234.00 from holding alstria office REIT AG or generate 44.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. alstria office REIT AG
Performance |
| Timeline |
| CN MODERN DAIRY |
| alstria office REIT |
CN MODERN and Alstria Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Alstria Office
The main advantage of trading using opposite CN MODERN and Alstria Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Alstria Office 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 Alstria Office will offset losses from the drop in Alstria Office's long position.The idea behind CN MODERN DAIRY and alstria office REIT AG 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.| Alstria Office vs. Materialise NV | Alstria Office vs. SANOK RUBBER ZY | Alstria Office vs. Sumitomo Rubber Industries | Alstria Office vs. Clean Energy Fuels |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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