Correlation Between Central Plaza and Ally Leasehold

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

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

Diversification Opportunities for Central Plaza and Ally Leasehold

-0.14

Correlation Coefficient

Central Plaza  Ally Leasehold

Good diversification

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

Pair Corralation between Central Plaza and Ally Leasehold

Assuming the 90 days trading horizon Central Plaza Hotel is expected to generate 81.31 times more return on investment than Ally Leasehold. However, Central Plaza is 81.31 times more volatile than Ally Leasehold Real. It trades about 0.11 of its potential returns per unit of risk. Ally Leasehold Real is currently generating about 0.22 per unit of risk. 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

Central Plaza Hotel  vs.  Ally Leasehold Real

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.

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.

Pair Trading with Central Plaza and Ally Leasehold

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

The idea behind Central Plaza Hotel and Ally Leasehold 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.