Correlation Between Thyssenkrupp and Workspace Group
Can any of the company-specific risk be diversified away by investing in both Thyssenkrupp and Workspace Group 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 Thyssenkrupp and Workspace Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thyssenkrupp AG ON and Workspace Group PLC, you can compare the effects of market volatilities on Thyssenkrupp and Workspace Group 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 Thyssenkrupp with a short position of Workspace Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and Workspace Group.
Diversification Opportunities for Thyssenkrupp and Workspace Group
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Thyssenkrupp and Workspace is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Thyssenkrupp AG ON and Workspace Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workspace Group PLC and Thyssenkrupp 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 Thyssenkrupp AG ON are associated (or correlated) with Workspace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workspace Group PLC has no effect on the direction of Thyssenkrupp i.e., Thyssenkrupp and Workspace Group go up and down completely randomly.
Pair Corralation between Thyssenkrupp and Workspace Group
Assuming the 90 days trading horizon Thyssenkrupp AG ON is expected to under-perform the Workspace Group. In addition to that, Thyssenkrupp is 1.5 times more volatile than Workspace Group PLC. It trades about -0.06 of its total potential returns per unit of risk. Workspace Group PLC is currently generating about 0.03 per unit of volatility. If you would invest 50,674 in Workspace Group PLC on September 3, 2024 and sell it today you would earn a total of 4,526 from holding Workspace Group PLC or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thyssenkrupp AG ON vs. Workspace Group PLC
Performance |
| Timeline |
| Thyssenkrupp AG ON |
| Workspace Group PLC |
Thyssenkrupp and Workspace Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thyssenkrupp and Workspace Group
The main advantage of trading using opposite Thyssenkrupp and Workspace Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thyssenkrupp position performs unexpectedly, Workspace Group 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 Workspace Group will offset losses from the drop in Workspace Group's long position.| Thyssenkrupp vs. Orient Telecoms | Thyssenkrupp vs. Zegona Communications Plc | Thyssenkrupp vs. Aeorema Communications Plc | Thyssenkrupp vs. Arrow Electronics |
| Workspace Group vs. SMA Solar Technology | Workspace Group vs. Concurrent Technologies Plc | Workspace Group vs. Automatic Data Processing | Workspace Group vs. Datagroup SE |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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