Correlation Between HIAG Immobilien and Plazza AG

Can any of the company-specific risk be diversified away by investing in both HIAG Immobilien and Plazza AG 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 HIAG Immobilien and Plazza AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HIAG Immobilien Holding and Plazza AG, you can compare the effects of market volatilities on HIAG Immobilien and Plazza AG 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 HIAG Immobilien with a short position of Plazza AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of HIAG Immobilien and Plazza AG.

Diversification Opportunities for HIAG Immobilien and Plazza AG

0.68

Correlation Coefficient

HIAG Immobilien  Plazza AG

Poor diversification

The 3 months correlation between HIAG and Plazza is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding HIAG Immobilien Holding and Plazza AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plazza AG and HIAG Immobilien 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 HIAG Immobilien Holding are associated (or correlated) with Plazza AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plazza AG has no effect on the direction of HIAG Immobilien i.e., HIAG Immobilien and Plazza AG go up and down completely randomly.

Pair Corralation between HIAG Immobilien and Plazza AG

Assuming the 90 days trading horizon HIAG Immobilien is expected to generate 2.37 times less return on investment than Plazza AG. But when comparing it to its historical volatility, HIAG Immobilien Holding is 1.47 times less risky than Plazza AG. It trades about 0.15 of its potential returns per unit of risk. Plazza AG is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  32,800  in Plazza AG on October 5, 2024 and sell it today you would earn a total of  1,200  from holding Plazza AG or generate 3.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

HIAG Immobilien Holding  vs.  Plazza AG

HIAG Immobilien Holding

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days HIAG Immobilien Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, HIAG Immobilien is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Plazza AG

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Plazza AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Plazza AG is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HIAG Immobilien and Plazza AG

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

The idea behind HIAG Immobilien Holding and Plazza AG 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.