Correlation Between Applied Blockchain and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Applied Blockchain and Bayer AG 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 Applied Blockchain and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Blockchain and Bayer AG, you can compare the effects of market volatilities on Applied Blockchain and Bayer AG 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 Applied Blockchain with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and Bayer AG.
Diversification Opportunities for Applied Blockchain and Bayer AG
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and Bayer is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Bayer AG go up and down completely randomly.
Pair Corralation between Applied Blockchain and Bayer AG
Given the investment horizon of 90 days Applied Blockchain is expected to generate 4.15 times more return on investment than Bayer AG. However, Applied Blockchain is 4.15 times more volatile than Bayer AG. It trades about 0.18 of its potential returns per unit of risk. Bayer AG is currently generating about -0.22 per unit of risk. If you would invest 365.00 in Applied Blockchain on August 30, 2024 and sell it today you would earn a total of 601.00 from holding Applied Blockchain or generate 164.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Blockchain vs. Bayer AG
Performance |
| Timeline |
| Applied Blockchain |
| Bayer AG |
Applied Blockchain and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Blockchain and Bayer AG
The main advantage of trading using opposite Applied Blockchain and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| Applied Blockchain vs. Magic Empire Global | Applied Blockchain vs. Zhong Yang Financial | Applied Blockchain vs. Netcapital | Applied Blockchain vs. Lazard |
| Bayer AG vs. Broadstone Net Lease | Bayer AG vs. Akanda Corp | Bayer AG vs. Alvotech | Bayer AG vs. Aquestive Therapeutics |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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