Correlation Between Dexus Convenience and SOCO
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience and SOCO 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 Dexus Convenience and SOCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dexus Convenience Retail and SOCO Corporation, you can compare the effects of market volatilities on Dexus Convenience and SOCO 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 Dexus Convenience with a short position of SOCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and SOCO.
Diversification Opportunities for Dexus Convenience and SOCO
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dexus and SOCO is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and SOCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCO and Dexus Convenience 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 Dexus Convenience Retail are associated (or correlated) with SOCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCO has no effect on the direction of Dexus Convenience i.e., Dexus Convenience and SOCO go up and down completely randomly.
Pair Corralation between Dexus Convenience and SOCO
Assuming the 90 days trading horizon Dexus Convenience Retail is expected to under-perform the SOCO. But the stock apears to be less risky and, when comparing its historical volatility, Dexus Convenience Retail is 5.58 times less risky than SOCO. The stock trades about -0.09 of its potential returns per unit of risk. The SOCO Corporation is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 9.10 in SOCO Corporation on September 12, 2024 and sell it today you would earn a total of 2.90 from holding SOCO Corporation or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dexus Convenience Retail vs. SOCO Corp.
Performance |
| Timeline |
| Dexus Convenience Retail |
| SOCO |
Dexus Convenience and SOCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and SOCO
The main advantage of trading using opposite Dexus Convenience and SOCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience position performs unexpectedly, SOCO 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 SOCO will offset losses from the drop in SOCO's long position.| Dexus Convenience vs. Charter Hall Retail | Dexus Convenience vs. GDI Property Group | Dexus Convenience vs. Australian Unity Office | Dexus Convenience vs. Ecofibre |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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