Correlation Between B Yair and Plaza Centers

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

By analyzing existing cross correlation between B Yair Building and Plaza Centers NV, you can compare the effects of market volatilities on B Yair and Plaza Centers 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 B Yair with a short position of Plaza Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Yair and Plaza Centers.

Diversification Opportunities for B Yair and Plaza Centers

-0.12

Correlation Coefficient

B Yair  Plaza Centers

Good diversification

The 3 months correlation between BYAR and Plaza is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding B Yair Building and Plaza Centers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Centers NV and B Yair 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 B Yair Building are associated (or correlated) with Plaza Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Centers NV has no effect on the direction of B Yair i.e., B Yair and Plaza Centers go up and down completely randomly.

Pair Corralation between B Yair and Plaza Centers

Assuming the 90 days trading horizon B Yair is expected to generate 2.66 times less return on investment than Plaza Centers. But when comparing it to its historical volatility, B Yair Building is 2.01 times less risky than Plaza Centers. It trades about 0.06 of its potential returns per unit of risk. Plaza Centers NV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12,000  in Plaza Centers NV on September 14, 2024 and sell it today you would earn a total of  8,220  from holding Plaza Centers NV or generate 68.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.52%
Values	Daily Returns

B Yair Building  vs.  Plaza Centers NV

B Yair Building

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in B Yair Building are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Yair sustained solid returns over the last few months and may actually be approaching a breakup point.

Plaza Centers NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plaza Centers NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with B Yair and Plaza Centers

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

The idea behind B Yair Building and Plaza Centers NV 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.