Correlation Between Global Knafaim and Plaza Centers

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

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

Diversification Opportunities for Global Knafaim and Plaza Centers

-0.08

Correlation Coefficient

Global Knafaim  Plaza Centers

Good diversification

The 3 months correlation between Global and Plaza is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global Knafaim Leasing 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 Global Knafaim 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 Global Knafaim Leasing 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 Global Knafaim i.e., Global Knafaim and Plaza Centers go up and down completely randomly.

Pair Corralation between Global Knafaim and Plaza Centers

Assuming the 90 days trading horizon Global Knafaim Leasing is expected to generate 0.66 times more return on investment than Plaza Centers. However, Global Knafaim Leasing is 1.52 times less risky than Plaza Centers. It trades about 0.19 of its potential returns per unit of risk. Plaza Centers NV is currently generating about -0.2 per unit of risk. If you would invest  5,720  in Global Knafaim Leasing on August 31, 2024 and sell it today you would earn a total of  1,310  from holding Global Knafaim Leasing or generate 22.9% return on investment over 90 days.

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

Global Knafaim Leasing  vs.  Plaza Centers NV

Global Knafaim Leasing

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Knafaim Leasing are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Global Knafaim sustained solid returns over the last few months and may actually be approaching a breakup point.

Plaza Centers NV

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Global Knafaim and Plaza Centers

The main advantage of trading using opposite Global Knafaim and Plaza Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Knafaim 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 Global Knafaim Leasing 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.