Correlation Between ASSOC BR and Retail Estates

Can any of the company-specific risk be diversified away by investing in both ASSOC BR and Retail Estates 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 ASSOC BR and Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASSOC BR FOODS and Retail Estates NV, you can compare the effects of market volatilities on ASSOC BR and Retail Estates 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 ASSOC BR with a short position of Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSOC BR and Retail Estates.

Diversification Opportunities for ASSOC BR and Retail Estates

-0.4

Correlation Coefficient

ASSOC BR  Retail Estates

Very good diversification

The 3 months correlation between ASSOC and Retail is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV and ASSOC BR 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 ASSOC BR FOODS are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of ASSOC BR i.e., ASSOC BR and Retail Estates go up and down completely randomly.

Pair Corralation between ASSOC BR and Retail Estates

Assuming the 90 days trading horizon ASSOC BR FOODS is expected to under-perform the Retail Estates. In addition to that, ASSOC BR is 1.75 times more volatile than Retail Estates NV. It trades about -0.01 of its total potential returns per unit of risk. Retail Estates NV is currently generating about 0.16 per unit of volatility. If you would invest  5,723  in Retail Estates NV on April 20, 2025 and sell it today you would earn a total of  607.00  from holding Retail Estates NV or generate 10.61% return on investment over 90 days.

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

ASSOC BR FOODS  vs.  Retail Estates NV

ASSOC BR FOODS

Risk-Adjusted Performance

Very Weak

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

Retail Estates NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Estates NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Retail Estates may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with ASSOC BR and Retail Estates

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

The idea behind ASSOC BR FOODS and Retail Estates NV 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.