Correlation Between CVR Energy and ALSO Holding
Can any of the company-specific risk be diversified away by investing in both CVR Energy and ALSO 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 CVR Energy and ALSO Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and ALSO Holding AG, you can compare the effects of market volatilities on CVR Energy and ALSO 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 CVR Energy with a short position of ALSO Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and ALSO Holding.
Diversification Opportunities for CVR Energy and ALSO Holding
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVR and ALSO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and ALSO Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALSO Holding AG and CVR Energy 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 CVR Energy are associated (or correlated) with ALSO Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALSO Holding AG has no effect on the direction of CVR Energy i.e., CVR Energy and ALSO Holding go up and down completely randomly.
Pair Corralation between CVR Energy and ALSO Holding
Assuming the 90 days trading horizon CVR Energy is expected to under-perform the ALSO Holding. In addition to that, CVR Energy is 3.53 times more volatile than ALSO Holding AG. It trades about -0.06 of its total potential returns per unit of risk. ALSO Holding AG is currently generating about -0.13 per unit of volatility. If you would invest 26,050 in ALSO Holding AG on September 2, 2024 and sell it today you would lose (2,750) from holding ALSO Holding AG or give up 10.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.97% |
| Values | Daily Returns |
CVR Energy vs. ALSO Holding AG
Performance |
| Timeline |
| CVR Energy |
| ALSO Holding AG |
CVR Energy and ALSO Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and ALSO Holding
The main advantage of trading using opposite CVR Energy and ALSO Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, ALSO 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 ALSO Holding will offset losses from the drop in ALSO Holding's long position.| CVR Energy vs. Uniper SE | CVR Energy vs. Mulberry Group PLC | CVR Energy vs. London Security Plc | CVR Energy vs. Triad Group PLC |
| ALSO Holding vs. Uniper SE | ALSO Holding vs. Mulberry Group PLC | ALSO Holding vs. London Security Plc | ALSO Holding vs. Triad Group PLC |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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