Correlation Between Plazza AG and Fundamenta Real

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

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

Diversification Opportunities for Plazza AG and Fundamenta Real

0.54

Correlation Coefficient

Plazza AG  Fundamenta Real

Very weak diversification

The 3 months correlation between Plazza and Fundamenta is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Plazza AG and Fundamenta Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamenta Real Estate and Plazza AG 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 Plazza AG are associated (or correlated) with Fundamenta Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamenta Real Estate has no effect on the direction of Plazza AG i.e., Plazza AG and Fundamenta Real go up and down completely randomly.

Pair Corralation between Plazza AG and Fundamenta Real

Assuming the 90 days trading horizon Plazza AG is expected to generate 0.43 times more return on investment than Fundamenta Real. However, Plazza AG is 2.34 times less risky than Fundamenta Real. It trades about 0.34 of its potential returns per unit of risk. Fundamenta Real Estate is currently generating about 0.13 per unit of risk. If you would invest  34,000  in Plazza AG on December 24, 2024 and sell it today you would earn a total of  2,400  from holding Plazza AG or generate 7.06% return on investment over 90 days.

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

Plazza AG  vs.  Fundamenta Real Estate

Plazza AG

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Plazza AG are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Plazza AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fundamenta Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamenta Real Estate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fundamenta Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Plazza AG and Fundamenta Real

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

The idea behind Plazza AG and Fundamenta Real Estate 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 Anywhere module to track or share privately all of your investments from the convenience of any device.