Correlation Between Alstria Office and Zegona Communications

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

By analyzing existing cross correlation between alstria office REIT AG and Zegona Communications Plc, you can compare the effects of market volatilities on Alstria Office and Zegona Communications 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 Alstria Office with a short position of Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and Zegona Communications.

Diversification Opportunities for Alstria Office and Zegona Communications

-0.53

Correlation Coefficient

Alstria Office  Zegona Communications

Excellent diversification

The 3 months correlation between Alstria and Zegona is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications Plc and Alstria Office 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 alstria office REIT AG are associated (or correlated) with Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Alstria Office i.e., Alstria Office and Zegona Communications go up and down completely randomly.

Pair Corralation between Alstria Office and Zegona Communications

Assuming the 90 days trading horizon alstria office REIT AG is expected to generate 0.87 times more return on investment than Zegona Communications. However, alstria office REIT AG is 1.14 times less risky than Zegona Communications. It trades about 0.26 of its potential returns per unit of risk. Zegona Communications Plc is currently generating about -0.11 per unit of risk. If you would invest  578.00  in alstria office REIT AG on September 19, 2024 and sell it today you would earn a total of  187.00  from holding alstria office REIT AG or generate 32.35% return on investment over 90 days.

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

alstria office REIT AG  vs.  Zegona Communications Plc

alstria office REIT

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Alstria Office disclosed solid returns over the last few months and may actually be approaching a breakup point.

Zegona Communications Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zegona Communications Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alstria Office and Zegona Communications

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

The idea behind alstria office REIT AG and Zegona Communications Plc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.