Correlation Between Aeorema Communications and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications 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 Aeorema Communications and Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Thyssenkrupp AG ON, you can compare the effects of market volatilities on Aeorema Communications 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 Aeorema Communications with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Thyssenkrupp.
Diversification Opportunities for Aeorema Communications and Thyssenkrupp
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeorema and Thyssenkrupp is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Thyssenkrupp AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ON and Aeorema Communications 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 Aeorema Communications Plc 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 ON has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Aeorema Communications and Thyssenkrupp
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to generate 0.99 times more return on investment than Thyssenkrupp. However, Aeorema Communications Plc is 1.01 times less risky than Thyssenkrupp. It trades about -0.01 of its potential returns per unit of risk. Thyssenkrupp AG ON is currently generating about -0.02 per unit of risk. If you would invest 7,582 in Aeorema Communications Plc on September 4, 2024 and sell it today you would lose (2,132) from holding Aeorema Communications Plc or give up 28.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Thyssenkrupp AG ON
Performance |
| Timeline |
| Aeorema Communications |
| Thyssenkrupp AG ON |
Aeorema Communications and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Thyssenkrupp
The main advantage of trading using opposite Aeorema Communications and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications 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.| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
| Thyssenkrupp vs. Samsung Electronics Co | Thyssenkrupp vs. Samsung Electronics Co | Thyssenkrupp vs. Hyundai Motor | Thyssenkrupp vs. Toyota Motor Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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