Correlation Between Ally Leasehold and Central Plaza

Can any of the company-specific risk be diversified away by investing in both Ally Leasehold and Central Plaza 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 Ally Leasehold and Central Plaza into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ally Leasehold Real and Central Plaza Hotel, you can compare the effects of market volatilities on Ally Leasehold and Central Plaza 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 Ally Leasehold with a short position of Central Plaza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Leasehold and Central Plaza.

Diversification Opportunities for Ally Leasehold and Central Plaza

-0.14

Correlation Coefficient

Ally Leasehold  Central Plaza

Good diversification

The 3 months correlation between Ally and Central is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ally Leasehold Real and Central Plaza Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plaza Hotel and Ally Leasehold 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 Ally Leasehold Real are associated (or correlated) with Central Plaza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plaza Hotel has no effect on the direction of Ally Leasehold i.e., Ally Leasehold and Central Plaza go up and down completely randomly.

Pair Corralation between Ally Leasehold and Central Plaza

Assuming the 90 days trading horizon Ally Leasehold is expected to generate 42.03 times less return on investment than Central Plaza. But when comparing it to its historical volatility, Ally Leasehold Real is 81.31 times less risky than Central Plaza. It trades about 0.22 of its potential returns per unit of risk. Central Plaza Hotel is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,580  in Central Plaza Hotel on September 13, 2024 and sell it today you would lose (905.00) from holding Central Plaza Hotel or give up 19.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Ally Leasehold Real  vs.  Central Plaza Hotel

Ally Leasehold Real

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Leasehold Real are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Ally Leasehold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Central Plaza Hotel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Plaza Hotel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical and fundamental indicators, Central Plaza sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ally Leasehold and Central Plaza

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

The idea behind Ally Leasehold Real and Central Plaza Hotel 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.