Correlation Between CN MODERN and DEUTSCHE WOHNEN
Can any of the company-specific risk be diversified away by investing in both CN MODERN and DEUTSCHE WOHNEN 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 CN MODERN and DEUTSCHE WOHNEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and DEUTSCHE WOHNEN ADRS12, you can compare the effects of market volatilities on CN MODERN and DEUTSCHE WOHNEN 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 CN MODERN with a short position of DEUTSCHE WOHNEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and DEUTSCHE WOHNEN.
Diversification Opportunities for CN MODERN and DEUTSCHE WOHNEN
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between 07M and DEUTSCHE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and DEUTSCHE WOHNEN ADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE WOHNEN ADRS12 and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with DEUTSCHE WOHNEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE WOHNEN ADRS12 has no effect on the direction of CN MODERN i.e., CN MODERN and DEUTSCHE WOHNEN go up and down completely randomly.
Pair Corralation between CN MODERN and DEUTSCHE WOHNEN
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the DEUTSCHE WOHNEN. In addition to that, CN MODERN is 1.26 times more volatile than DEUTSCHE WOHNEN ADRS12. It trades about -0.18 of its total potential returns per unit of risk. DEUTSCHE WOHNEN ADRS12 is currently generating about -0.01 per unit of volatility. If you would invest 1,130 in DEUTSCHE WOHNEN ADRS12 on October 29, 2024 and sell it today you would lose (10.00) from holding DEUTSCHE WOHNEN ADRS12 or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. DEUTSCHE WOHNEN ADRS12
Performance |
| Timeline |
| CN MODERN DAIRY |
| DEUTSCHE WOHNEN ADRS12 |
CN MODERN and DEUTSCHE WOHNEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and DEUTSCHE WOHNEN
The main advantage of trading using opposite CN MODERN and DEUTSCHE WOHNEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN will offset losses from the drop in DEUTSCHE WOHNEN's long position.| CN MODERN vs. Keck Seng Investments | CN MODERN vs. MGIC INVESTMENT | CN MODERN vs. BE Semiconductor Industries | CN MODERN vs. FIRST SAVINGS FINL |
| DEUTSCHE WOHNEN vs. PLANT VEDA FOODS | DEUTSCHE WOHNEN vs. PATTIES FOODS | DEUTSCHE WOHNEN vs. Amkor Technology | DEUTSCHE WOHNEN vs. Maple Leaf Foods |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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