Correlation Between Plaza Centers and Inbar Group

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

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

Diversification Opportunities for Plaza Centers and Inbar Group

-0.42

Correlation Coefficient

Plaza Centers  Inbar Group

Very good diversification

The 3 months correlation between Plaza and Inbar is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Centers NV and Inbar Group Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inbar Group Finance and Plaza Centers 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 Plaza Centers NV are associated (or correlated) with Inbar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inbar Group Finance has no effect on the direction of Plaza Centers i.e., Plaza Centers and Inbar Group go up and down completely randomly.

Pair Corralation between Plaza Centers and Inbar Group

Assuming the 90 days trading horizon Plaza Centers NV is expected to under-perform the Inbar Group. But the stock apears to be less risky and, when comparing its historical volatility, Plaza Centers NV is 7.66 times less risky than Inbar Group. The stock trades about -0.03 of its potential returns per unit of risk. The Inbar Group Finance is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  38,740  in Inbar Group Finance on December 30, 2024 and sell it today you would earn a total of  30,020  from holding Inbar Group Finance or generate 77.49% return on investment over 90 days.

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

Plaza Centers NV  vs.  Inbar Group Finance

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.

Inbar Group Finance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inbar Group Finance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inbar Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plaza Centers and Inbar Group

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

The idea behind Plaza Centers NV and Inbar Group Finance 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.