Correlation Between ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau 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 ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau AG, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau 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 ARISTOCRAT LEISURE with a short position of Gesundheitswelt Chiemgau. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau.
Diversification Opportunities for ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARISTOCRAT and Gesundheitswelt is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gesundheitswelt Chiemgau and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE are associated (or correlated) with Gesundheitswelt Chiemgau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gesundheitswelt Chiemgau has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 1.5 times more return on investment than Gesundheitswelt Chiemgau. However, ARISTOCRAT LEISURE is 1.5 times more volatile than Gesundheitswelt Chiemgau AG. It trades about 0.1 of its potential returns per unit of risk. Gesundheitswelt Chiemgau AG is currently generating about 0.09 per unit of risk. If you would invest 3,979 in ARISTOCRAT LEISURE on September 13, 2024 and sell it today you would earn a total of 101.00 from holding ARISTOCRAT LEISURE or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Gesundheitswelt Chiemgau AG
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Gesundheitswelt Chiemgau |
ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau
The main advantage of trading using opposite ARISTOCRAT LEISURE and Gesundheitswelt Chiemgau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE position performs unexpectedly, Gesundheitswelt Chiemgau 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 Gesundheitswelt Chiemgau will offset losses from the drop in Gesundheitswelt Chiemgau's long position.| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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