Correlation Between EBRO FOODS and Mhlbauer Holding
Can any of the company-specific risk be diversified away by investing in both EBRO FOODS 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 EBRO FOODS and Mhlbauer Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBRO FOODS and Mhlbauer Holding AG, you can compare the effects of market volatilities on EBRO FOODS 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 EBRO FOODS with a short position of Mhlbauer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and Mhlbauer Holding.
Diversification Opportunities for EBRO FOODS and Mhlbauer Holding
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EBRO and Mhlbauer is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mhlbauer Holding and EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS i.e., EBRO FOODS and Mhlbauer Holding go up and down completely randomly.
Pair Corralation between EBRO FOODS and Mhlbauer Holding
Assuming the 90 days trading horizon EBRO FOODS is expected to generate 9.48 times less return on investment than Mhlbauer Holding. But when comparing it to its historical volatility, EBRO FOODS is 1.82 times less risky than Mhlbauer Holding. It trades about 0.06 of its potential returns per unit of risk. Mhlbauer Holding AG is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,900 in Mhlbauer Holding AG on October 25, 2024 and sell it today you would earn a total of 420.00 from holding Mhlbauer Holding AG or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EBRO FOODS vs. Mhlbauer Holding AG
Performance |
| Timeline |
| EBRO FOODS |
| Mhlbauer Holding |
EBRO FOODS and Mhlbauer Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBRO FOODS and Mhlbauer Holding
The main advantage of trading using opposite EBRO FOODS and Mhlbauer Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS 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 EBRO FOODS 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.| Mhlbauer Holding vs. PLAYMATES TOYS | Mhlbauer Holding vs. China BlueChemical | Mhlbauer Holding vs. PLAYWAY SA ZY 10 | Mhlbauer Holding vs. LG Display Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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