Correlation Between Choice Properties and Frasers Centrepoint

Can any of the company-specific risk be diversified away by investing in both Choice Properties and Frasers Centrepoint 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 Choice Properties and Frasers Centrepoint into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Choice Properties Real and Frasers Centrepoint Trust, you can compare the effects of market volatilities on Choice Properties and Frasers Centrepoint 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 Choice Properties with a short position of Frasers Centrepoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Properties and Frasers Centrepoint.

Diversification Opportunities for Choice Properties and Frasers Centrepoint

0.37

Correlation Coefficient

Choice Properties  Frasers Centrepoint

Weak diversification

The 3 months correlation between Choice and Frasers is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Choice Properties Real and Frasers Centrepoint Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frasers Centrepoint Trust and Choice 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 Choice Properties Real are associated (or correlated) with Frasers Centrepoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frasers Centrepoint Trust has no effect on the direction of Choice Properties i.e., Choice Properties and Frasers Centrepoint go up and down completely randomly.

Pair Corralation between Choice Properties and Frasers Centrepoint

Assuming the 90 days horizon Choice Properties Real is expected to under-perform the Frasers Centrepoint. In addition to that, Choice Properties is 1.04 times more volatile than Frasers Centrepoint Trust. It trades about -0.29 of its total potential returns per unit of risk. Frasers Centrepoint Trust is currently generating about -0.22 per unit of volatility. If you would invest  164.00  in Frasers Centrepoint Trust on January 26, 2024 and sell it today you would lose (9.00) from holding Frasers Centrepoint Trust or give up 5.49% of portfolio value over 90 days.

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

Choice Properties Real  vs.  Frasers Centrepoint Trust

Choice Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choice Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Frasers Centrepoint Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frasers Centrepoint Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Frasers Centrepoint is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Choice Properties and Frasers Centrepoint

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

The idea behind Choice Properties Real and Frasers Centrepoint Trust 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.