Correlation Between Firm Capital and SmartCentres Real

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

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

Diversification Opportunities for Firm Capital and SmartCentres Real

0.57

Correlation Coefficient

Firm Capital  SmartCentres Real

Very weak diversification

The 3 months correlation between Firm and SmartCentres is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Firm Capital Property and SmartCentres Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartCentres Real Estate and Firm Capital 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 Firm Capital Property are associated (or correlated) with SmartCentres Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartCentres Real Estate has no effect on the direction of Firm Capital i.e., Firm Capital and SmartCentres Real go up and down completely randomly.

Pair Corralation between Firm Capital and SmartCentres Real

Assuming the 90 days trading horizon Firm Capital is expected to generate 1.21 times less return on investment than SmartCentres Real. In addition to that, Firm Capital is 1.52 times more volatile than SmartCentres Real Estate. It trades about 0.06 of its total potential returns per unit of risk. SmartCentres Real Estate is currently generating about 0.12 per unit of volatility. If you would invest  2,460  in SmartCentres Real Estate on April 20, 2025 and sell it today you would earn a total of  119.00  from holding SmartCentres Real Estate or generate 4.84% return on investment over 90 days.

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

Firm Capital Property  vs.  SmartCentres Real Estate

Firm Capital Property

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Firm Capital Property are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Firm Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SmartCentres Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SmartCentres Real Estate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SmartCentres Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Firm Capital and SmartCentres Real

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

The idea behind Firm Capital Property and SmartCentres Real Estate 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.