Correlation Between Central Plaza and Global Green

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

Diversification Opportunities for Central Plaza and Global Green

0.5

Correlation Coefficient

Central Plaza  Global Green

Very weak diversification

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

Pair Corralation between Central Plaza and Global Green

Assuming the 90 days trading horizon Central Plaza Hotel is expected to under-perform the Global Green. In addition to that, Central Plaza is 1.27 times more volatile than Global Green Chemicals. It trades about -0.26 of its total potential returns per unit of risk. Global Green Chemicals is currently generating about -0.3 per unit of volatility. If you would invest  464.00  in Global Green Chemicals on October 7, 2024 and sell it today you would lose (42.00) from holding Global Green Chemicals or give up 9.05% of portfolio value over 90 days.

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

Central Plaza Hotel  vs.  Global Green Chemicals

Central Plaza Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Plaza Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Global Green Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Green Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Central Plaza and Global Green

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

The idea behind Central Plaza Hotel and Global Green Chemicals 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.