Correlation Between TRON and Plazza AG

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

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

Diversification Opportunities for TRON and Plazza AG

-0.23

Correlation Coefficient

TRON  Plazza AG

Very good diversification

The 3 months correlation between TRON and Plazza is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Plazza AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plazza AG and TRON 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 TRON 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 TRON i.e., TRON and Plazza AG go up and down completely randomly.

Pair Corralation between TRON and Plazza AG

Assuming the 90 days trading horizon TRON is expected to under-perform the Plazza AG. In addition to that, TRON is 10.56 times more volatile than Plazza AG. It trades about -0.02 of its total potential returns per unit of risk. Plazza AG is currently generating about 0.31 per unit of volatility. If you would invest  34,100  in Plazza AG on December 21, 2024 and sell it today you would earn a total of  2,200  from holding Plazza AG or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

TRON  vs.  Plazza AG

TRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TRON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Plazza AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plazza AG are ranked lower than 24 (%) 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.

Pair Trading with TRON and Plazza AG

The main advantage of trading using opposite TRON and Plazza AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON 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 TRON 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.