Correlation Between Clal Industries and Plaza Centers

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

By analyzing existing cross correlation between Clal Industries and and Plaza Centers NV, you can compare the effects of market volatilities on Clal Industries and Plaza Centers 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 Clal Industries with a short position of Plaza Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Industries and Plaza Centers.

Diversification Opportunities for Clal Industries and Plaza Centers

-0.24

Correlation Coefficient

Clal Industries  Plaza Centers

Very good diversification

The 3 months correlation between Clal and Plaza is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Clal Industries and and Plaza Centers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Centers NV and Clal Industries 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 Clal Industries and are associated (or correlated) with Plaza Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Centers NV has no effect on the direction of Clal Industries i.e., Clal Industries and Plaza Centers go up and down completely randomly.

Pair Corralation between Clal Industries and Plaza Centers

Assuming the 90 days trading horizon Clal Industries and is expected to under-perform the Plaza Centers. In addition to that, Clal Industries is 1.27 times more volatile than Plaza Centers NV. It trades about -0.1 of its total potential returns per unit of risk. Plaza Centers NV is currently generating about -0.03 per unit of volatility. If you would invest  13,970  in Plaza Centers NV on December 30, 2024 and sell it today you would lose (540.00) from holding Plaza Centers NV or give up 3.87% of portfolio value over 90 days.

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

Clal Industries and  vs.  Plaza Centers NV

Clal Industries

Risk-Adjusted Performance

Very Weak

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

Plaza Centers NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plaza Centers NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Plaza Centers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Clal Industries and Plaza Centers

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

The idea behind Clal Industries and and Plaza Centers NV 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.