Correlation Between Rheinmetall and Concurrent Technologies
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Concurrent Technologies 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 Rheinmetall and Concurrent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Concurrent Technologies Plc, you can compare the effects of market volatilities on Rheinmetall and Concurrent Technologies 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 Rheinmetall with a short position of Concurrent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Concurrent Technologies.
Diversification Opportunities for Rheinmetall and Concurrent Technologies
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rheinmetall and Concurrent is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Concurrent Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concurrent Technologies and Rheinmetall 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 Rheinmetall AG are associated (or correlated) with Concurrent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concurrent Technologies has no effect on the direction of Rheinmetall i.e., Rheinmetall and Concurrent Technologies go up and down completely randomly.
Pair Corralation between Rheinmetall and Concurrent Technologies
Assuming the 90 days trading horizon Rheinmetall is expected to generate 1.07 times less return on investment than Concurrent Technologies. But when comparing it to its historical volatility, Rheinmetall AG is 1.49 times less risky than Concurrent Technologies. It trades about 0.55 of its potential returns per unit of risk. Concurrent Technologies Plc is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 14,000 in Concurrent Technologies Plc on November 7, 2024 and sell it today you would earn a total of 3,900 from holding Concurrent Technologies Plc or generate 27.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rheinmetall AG vs. Concurrent Technologies Plc
Performance |
| Timeline |
| Rheinmetall AG |
| Concurrent Technologies |
Rheinmetall and Concurrent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Concurrent Technologies
The main advantage of trading using opposite Rheinmetall and Concurrent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Concurrent Technologies 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 Concurrent Technologies will offset losses from the drop in Concurrent Technologies' long position.| Rheinmetall vs. Nordic Semiconductor ASA | Rheinmetall vs. Aptitude Software Group | Rheinmetall vs. Pfeiffer Vacuum Technology | Rheinmetall vs. BE Semiconductor Industries |
| Concurrent Technologies vs. Public Storage | Concurrent Technologies vs. Ion Beam Applications | Concurrent Technologies vs. Silver Bullet Data | Concurrent Technologies vs. Alliance Data Systems |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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