Correlation Between SIVERS SEMICONDUCTORS and Mhlbauer Holding

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Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS and Mhlbauer 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 SIVERS SEMICONDUCTORS and Mhlbauer Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIVERS SEMICONDUCTORS AB and Mhlbauer Holding AG, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS and Mhlbauer 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 SIVERS SEMICONDUCTORS with a short position of Mhlbauer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and Mhlbauer Holding.

Diversification Opportunities for SIVERS SEMICONDUCTORS and Mhlbauer Holding

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between SIVERS and Mhlbauer is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mhlbauer Holding and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB are associated (or correlated) with Mhlbauer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mhlbauer Holding has no effect on the direction of SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and Mhlbauer Holding go up and down completely randomly.

Pair Corralation between SIVERS SEMICONDUCTORS and Mhlbauer Holding

Assuming the 90 days horizon SIVERS SEMICONDUCTORS AB is expected to under-perform the Mhlbauer Holding. In addition to that, SIVERS SEMICONDUCTORS is 3.31 times more volatile than Mhlbauer Holding AG. It trades about -0.04 of its total potential returns per unit of risk. Mhlbauer Holding AG is currently generating about -0.06 per unit of volatility. If you would invest  5,500  in Mhlbauer Holding AG on September 12, 2024 and sell it today you would lose (1,540) from holding Mhlbauer Holding AG or give up 28.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

SIVERS SEMICONDUCTORS AB  vs.  Mhlbauer Holding AG

 Performance 
       Timeline  
SIVERS SEMICONDUCTORS 

Risk-Adjusted Performance

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Over the last 90 days SIVERS SEMICONDUCTORS AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Mhlbauer Holding 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Mhlbauer Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SIVERS SEMICONDUCTORS and Mhlbauer Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SIVERS SEMICONDUCTORS and Mhlbauer Holding

The main advantage of trading using opposite SIVERS SEMICONDUCTORS and Mhlbauer Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIVERS SEMICONDUCTORS position performs unexpectedly, Mhlbauer 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 Mhlbauer Holding will offset losses from the drop in Mhlbauer Holding's long position.
The idea behind SIVERS SEMICONDUCTORS AB and Mhlbauer Holding AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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