Correlation Between Allreal Holding and Plazza AG

Can any of the company-specific risk be diversified away by investing in both Allreal Holding and Plazza AG 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 Allreal Holding and Plazza AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allreal Holding and Plazza AG, you can compare the effects of market volatilities on Allreal Holding and Plazza AG 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 Allreal Holding with a short position of Plazza AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allreal Holding and Plazza AG.

Diversification Opportunities for Allreal Holding and Plazza AG

0.58

Correlation Coefficient

Allreal Holding  Plazza AG

Very weak diversification

The 3 months correlation between Allreal and Plazza is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Allreal Holding and Plazza AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plazza AG and Allreal Holding 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 Allreal Holding are associated (or correlated) with Plazza AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plazza AG has no effect on the direction of Allreal Holding i.e., Allreal Holding and Plazza AG go up and down completely randomly.

Pair Corralation between Allreal Holding and Plazza AG

Assuming the 90 days trading horizon Allreal Holding is expected to generate 1.2 times less return on investment than Plazza AG. In addition to that, Allreal Holding is 2.0 times more volatile than Plazza AG. It trades about 0.03 of its total potential returns per unit of risk. Plazza AG is currently generating about 0.07 per unit of volatility. If you would invest  29,899  in Plazza AG on October 21, 2024 and sell it today you would earn a total of  4,401  from holding Plazza AG or generate 14.72% return on investment over 90 days.

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

Allreal Holding  vs.  Plazza AG

Allreal Holding

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allreal Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Allreal Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Plazza AG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plazza AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Plazza AG is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Allreal Holding and Plazza AG

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

The idea behind Allreal Holding and Plazza AG 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.