Correlation Between Plazza AG and Zueblin Immobilien

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

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

Diversification Opportunities for Plazza AG and Zueblin Immobilien

0.8

Correlation Coefficient

Plazza AG  Zueblin Immobilien

Very poor diversification

The 3 months correlation between Plazza and Zueblin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Plazza AG and Zueblin Immobilien Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zueblin Immobilien 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 Zueblin Immobilien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zueblin Immobilien has no effect on the direction of Plazza AG i.e., Plazza AG and Zueblin Immobilien go up and down completely randomly.

Pair Corralation between Plazza AG and Zueblin Immobilien

Assuming the 90 days trading horizon Plazza AG is expected to generate 18.75 times less return on investment than Zueblin Immobilien. But when comparing it to its historical volatility, Plazza AG is 9.44 times less risky than Zueblin Immobilien. It trades about 0.11 of its potential returns per unit of risk. Zueblin Immobilien Holding is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,960  in Zueblin Immobilien Holding on September 16, 2024 and sell it today you would earn a total of  340.00  from holding Zueblin Immobilien Holding or generate 11.49% return on investment over 90 days.

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

Plazza AG  vs.  Zueblin Immobilien Holding

Plazza AG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plazza AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Plazza AG is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Zueblin Immobilien

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zueblin Immobilien Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zueblin Immobilien showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plazza AG and Zueblin Immobilien

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

The idea behind Plazza AG and Zueblin Immobilien 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.