Correlation Between Aerofoam Metals and Mayr Melnhof

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

Diversification Opportunities for Aerofoam Metals and Mayr Melnhof

-1.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aerofoam and Mayr is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerofoam Metals and Mayr Melnhof Karton AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayr Melnhof Karton and Aerofoam Metals 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 Aerofoam Metals are associated (or correlated) with Mayr Melnhof. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayr Melnhof Karton has no effect on the direction of Aerofoam Metals i.e., Aerofoam Metals and Mayr Melnhof go up and down completely randomly.

Pair Corralation between Aerofoam Metals and Mayr Melnhof

If you would invest  10,811  in Mayr Melnhof Karton AG on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Mayr Melnhof Karton AG or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Aerofoam Metals  vs.  Mayr Melnhof Karton AG

 Performance 
       Timeline  
Aerofoam Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aerofoam Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Aerofoam Metals is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.
Mayr Melnhof Karton 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mayr Melnhof Karton AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Mayr Melnhof is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Aerofoam Metals and Mayr Melnhof Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerofoam Metals and Mayr Melnhof

The main advantage of trading using opposite Aerofoam Metals and Mayr Melnhof positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerofoam Metals position performs unexpectedly, Mayr Melnhof 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 Mayr Melnhof will offset losses from the drop in Mayr Melnhof's long position.
The idea behind Aerofoam Metals and Mayr Melnhof Karton 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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