Correlation Between Essential Properties and CK Asset

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

Diversification Opportunities for Essential Properties and CK Asset

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Essential and CHKGF is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and CK Asset Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Asset Holdings and Essential 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 Essential Properties Realty are associated (or correlated) with CK Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Asset Holdings has no effect on the direction of Essential Properties i.e., Essential Properties and CK Asset go up and down completely randomly.

Pair Corralation between Essential Properties and CK Asset

Given the investment horizon of 90 days Essential Properties Realty is expected to generate 0.52 times more return on investment than CK Asset. However, Essential Properties Realty is 1.94 times less risky than CK Asset. It trades about 0.02 of its potential returns per unit of risk. CK Asset Holdings is currently generating about -0.02 per unit of risk. If you would invest  2,342  in Essential Properties Realty on December 29, 2023 and sell it today you would earn a total of  311.00  from holding Essential Properties Realty or generate 13.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy87.45%
ValuesDaily Returns

Essential Properties Realty  vs.  CK Asset Holdings

 Performance 
       Timeline  
Essential Properties 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Essential Properties Realty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Essential Properties is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
CK Asset Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days CK Asset Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Essential Properties and CK Asset Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Essential Properties and CK Asset

The main advantage of trading using opposite Essential Properties and CK Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Properties position performs unexpectedly, CK Asset 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 CK Asset will offset losses from the drop in CK Asset's long position.
The idea behind Essential Properties Realty and CK Asset Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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