Correlation Between PDG Realty and Plascar Participaes

Can any of the company-specific risk be diversified away by investing in both PDG Realty and Plascar Participaes 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 PDG Realty and Plascar Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PDG Realty SA and Plascar Participaes Industriais, you can compare the effects of market volatilities on PDG Realty and Plascar Participaes 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 PDG Realty with a short position of Plascar Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDG Realty and Plascar Participaes.

Diversification Opportunities for PDG Realty and Plascar Participaes

0.13

Correlation Coefficient

PDG Realty  Plascar Participaes

Average diversification

The 3 months correlation between PDG and Plascar is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PDG Realty SA and Plascar Participaes Industriai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plascar Participaes and PDG Realty 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 PDG Realty SA are associated (or correlated) with Plascar Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plascar Participaes has no effect on the direction of PDG Realty i.e., PDG Realty and Plascar Participaes go up and down completely randomly.

Pair Corralation between PDG Realty and Plascar Participaes

Assuming the 90 days trading horizon PDG Realty SA is expected to generate 26.45 times more return on investment than Plascar Participaes. However, PDG Realty is 26.45 times more volatile than Plascar Participaes Industriais. It trades about 0.13 of its potential returns per unit of risk. Plascar Participaes Industriais is currently generating about 0.05 per unit of risk. If you would invest  125.00  in PDG Realty SA on December 23, 2024 and sell it today you would lose (45.00) from holding PDG Realty SA or give up 36.0% of portfolio value over 90 days.

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

PDG Realty SA  vs.  Plascar Participaes Industriai

PDG Realty SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PDG Realty SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PDG Realty unveiled solid returns over the last few months and may actually be approaching a breakup point.

Plascar Participaes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Plascar Participaes Industriais are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plascar Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PDG Realty and Plascar Participaes

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

The idea behind PDG Realty SA and Plascar Participaes Industriais 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.