Correlation Between Glenveagh Properties and Cairn Homes

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Can any of the company-specific risk be diversified away by investing in both Glenveagh Properties and Cairn Homes 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 Glenveagh Properties and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glenveagh Properties PLC and Cairn Homes PLC, you can compare the effects of market volatilities on Glenveagh Properties and Cairn Homes 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 Glenveagh Properties with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glenveagh Properties and Cairn Homes.

Diversification Opportunities for Glenveagh Properties and Cairn Homes

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Glenveagh and Cairn is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Glenveagh Properties PLC and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Glenveagh Properties 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 Glenveagh Properties PLC are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Glenveagh Properties i.e., Glenveagh Properties and Cairn Homes go up and down completely randomly.

Pair Corralation between Glenveagh Properties and Cairn Homes

Assuming the 90 days trading horizon Glenveagh Properties PLC is expected to generate 0.62 times more return on investment than Cairn Homes. However, Glenveagh Properties PLC is 1.6 times less risky than Cairn Homes. It trades about -0.2 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.15 per unit of risk. If you would invest  160.00  in Glenveagh Properties PLC on August 30, 2024 and sell it today you would lose (8.00) from holding Glenveagh Properties PLC or give up 5.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Glenveagh Properties PLC  vs.  Cairn Homes PLC

 Performance 
       Timeline  
Glenveagh Properties PLC 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Glenveagh Properties PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Glenveagh Properties is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Cairn Homes PLC 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Cairn Homes PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Cairn Homes may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Glenveagh Properties and Cairn Homes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Glenveagh Properties and Cairn Homes

The main advantage of trading using opposite Glenveagh Properties and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glenveagh Properties position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.
The idea behind Glenveagh Properties PLC and Cairn Homes PLC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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