Correlation Between ABERFORTH SMCOS and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both ABERFORTH SMCOS and Thyssenkrupp 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 ABERFORTH SMCOS and Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABERFORTH SMCOS TRLS 01 and thyssenkrupp AG, you can compare the effects of market volatilities on ABERFORTH SMCOS and Thyssenkrupp 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 ABERFORTH SMCOS with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABERFORTH SMCOS and Thyssenkrupp.
Diversification Opportunities for ABERFORTH SMCOS and Thyssenkrupp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABERFORTH and Thyssenkrupp is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ABERFORTH SMCOS TRLS 01 and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG and ABERFORTH SMCOS 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 ABERFORTH SMCOS TRLS 01 are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of ABERFORTH SMCOS i.e., ABERFORTH SMCOS and Thyssenkrupp go up and down completely randomly.
Pair Corralation between ABERFORTH SMCOS and Thyssenkrupp
Assuming the 90 days horizon ABERFORTH SMCOS TRLS 01 is expected to generate 0.45 times more return on investment than Thyssenkrupp. However, ABERFORTH SMCOS TRLS 01 is 2.21 times less risky than Thyssenkrupp. It trades about 0.05 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about -0.07 per unit of risk. If you would invest 1,512 in ABERFORTH SMCOS TRLS 01 on August 25, 2024 and sell it today you would earn a total of 198.00 from holding ABERFORTH SMCOS TRLS 01 or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABERFORTH SMCOS TRLS 01 vs. thyssenkrupp AG
Performance |
| Timeline |
| ABERFORTH SMCOS TRLS |
| thyssenkrupp AG |
ABERFORTH SMCOS and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABERFORTH SMCOS and Thyssenkrupp
The main advantage of trading using opposite ABERFORTH SMCOS and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABERFORTH SMCOS position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| ABERFORTH SMCOS vs. Apple Inc | ABERFORTH SMCOS vs. Apple Inc | ABERFORTH SMCOS vs. Apple Inc | ABERFORTH SMCOS vs. Apple Inc |
| Thyssenkrupp vs. WillScot Mobile Mini | Thyssenkrupp vs. Grand Canyon Education | Thyssenkrupp vs. Gamma Communications plc | Thyssenkrupp vs. EEDUCATION ALBERT AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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