Correlation Between Choice Properties and Automotive Properties

Can any of the company-specific risk be diversified away by investing in both Choice Properties and Automotive Properties 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 Automotive Properties 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 Automotive Properties Real, you can compare the effects of market volatilities on Choice Properties and Automotive Properties 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 Automotive Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Properties and Automotive Properties.

Diversification Opportunities for Choice Properties and Automotive Properties

0.5

Correlation Coefficient

Choice Properties  Automotive Properties

Very weak diversification

The 3 months correlation between Choice and Automotive is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Choice Properties Real and Automotive Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Properties 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 Automotive Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Properties has no effect on the direction of Choice Properties i.e., Choice Properties and Automotive Properties go up and down completely randomly.

Pair Corralation between Choice Properties and Automotive Properties

Assuming the 90 days trading horizon Choice Properties is expected to generate 4.46 times less return on investment than Automotive Properties. In addition to that, Choice Properties is 1.18 times more volatile than Automotive Properties Real. It trades about 0.05 of its total potential returns per unit of risk. Automotive Properties Real is currently generating about 0.25 per unit of volatility. If you would invest  1,006  in Automotive Properties Real on April 23, 2025 and sell it today you would earn a total of  128.00  from holding Automotive Properties Real or generate 12.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Choice Properties Real  vs.  Automotive Properties Real

Choice Properties Real

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Choice Properties Real are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Choice Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Automotive Properties

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Automotive Properties Real are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Automotive Properties may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Choice Properties and Automotive Properties

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

The idea behind Choice Properties Real and Automotive Properties Real 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.