Correlation Between Zug Estates and Allreal Holding

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

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

Diversification Opportunities for Zug Estates and Allreal Holding

0.75

Correlation Coefficient

Zug Estates  Allreal Holding

Poor diversification

The 3 months correlation between Zug and Allreal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Zug Estates Holding and Allreal Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allreal Holding and Zug Estates 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 Zug Estates Holding are associated (or correlated) with Allreal Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allreal Holding has no effect on the direction of Zug Estates i.e., Zug Estates and Allreal Holding go up and down completely randomly.

Pair Corralation between Zug Estates and Allreal Holding

Assuming the 90 days trading horizon Zug Estates Holding is expected to generate 1.93 times more return on investment than Allreal Holding. However, Zug Estates is 1.93 times more volatile than Allreal Holding. It trades about 0.11 of its potential returns per unit of risk. Allreal Holding is currently generating about 0.19 per unit of risk. If you would invest  189,500  in Zug Estates Holding on October 24, 2024 and sell it today you would earn a total of  14,500  from holding Zug Estates Holding or generate 7.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Zug Estates Holding  vs.  Allreal Holding

Zug Estates Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zug Estates Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zug Estates may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Allreal Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allreal Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Allreal Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zug Estates and Allreal Holding

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

The idea behind Zug Estates Holding and Allreal Holding 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.