Correlation Between Wharf Real and Asia Pptys

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

By analyzing existing cross correlation between Wharf Real Estate and Asia Pptys, you can compare the effects of market volatilities on Wharf Real and Asia Pptys 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 Wharf Real with a short position of Asia Pptys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wharf Real and Asia Pptys.

Diversification Opportunities for Wharf Real and Asia Pptys

-0.59

Correlation Coefficient

Wharf Real  Asia Pptys

Excellent diversification

The 3 months correlation between Wharf and Asia is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Wharf Real Estate and Asia Pptys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pptys and Wharf Real 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 Wharf Real Estate are associated (or correlated) with Asia Pptys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pptys has no effect on the direction of Wharf Real i.e., Wharf Real and Asia Pptys go up and down completely randomly.

Pair Corralation between Wharf Real and Asia Pptys

Assuming the 90 days horizon Wharf Real Estate is expected to under-perform the Asia Pptys. But the pink sheet apears to be less risky and, when comparing its historical volatility, Wharf Real Estate is 4.23 times less risky than Asia Pptys. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Asia Pptys is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6.10  in Asia Pptys on August 2, 2024 and sell it today you would earn a total of  0.23  from holding Asia Pptys or generate 3.77% return on investment over 90 days.

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

Wharf Real Estate  vs.  Asia Pptys

Wharf Real Estate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wharf Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Wharf Real reported solid returns over the last few months and may actually be approaching a breakup point.

Asia Pptys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Pptys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Asia Pptys is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wharf Real and Asia Pptys

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

The idea behind Wharf Real Estate and Asia Pptys 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.