Correlation Between Plano Plano and Medical Properties

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

By analyzing existing cross correlation between Plano Plano Desenvolvimento and Medical Properties Trust,, you can compare the effects of market volatilities on Plano Plano and Medical Properties 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 Plano Plano with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plano Plano and Medical Properties.

Diversification Opportunities for Plano Plano and Medical Properties

0.47

Correlation Coefficient

Plano Plano  Medical Properties

Very weak diversification

The 3 months correlation between Plano and Medical is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Plano Plano Desenvolvimento and Medical Properties Trust, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust, and Plano Plano 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 Plano Plano Desenvolvimento are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust, has no effect on the direction of Plano Plano i.e., Plano Plano and Medical Properties go up and down completely randomly.

Pair Corralation between Plano Plano and Medical Properties

Assuming the 90 days trading horizon Plano Plano Desenvolvimento is expected to under-perform the Medical Properties. But the stock apears to be less risky and, when comparing its historical volatility, Plano Plano Desenvolvimento is 2.22 times less risky than Medical Properties. The stock trades about -0.21 of its potential returns per unit of risk. The Medical Properties Trust, is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,423  in Medical Properties Trust, on October 9, 2024 and sell it today you would lose (197.00) from holding Medical Properties Trust, or give up 13.84% of portfolio value over 90 days.

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

Plano Plano Desenvolvimento  vs.  Medical Properties Trust,

Plano Plano Desenvol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plano Plano Desenvolvimento has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Medical Properties Trust,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Medical Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Plano Plano and Medical Properties

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

The idea behind Plano Plano Desenvolvimento and Medical Properties Trust, 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.