Correlation Between Ceres Power and Varta AG
Can any of the company-specific risk be diversified away by investing in both Ceres Power and Varta 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 Ceres Power and Varta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceres Power Holdings and Varta AG, you can compare the effects of market volatilities on Ceres Power and Varta 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 Ceres Power with a short position of Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceres Power and Varta AG.
Diversification Opportunities for Ceres Power and Varta AG
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ceres and Varta is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ceres Power Holdings and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG and Ceres Power 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 Ceres Power Holdings are associated (or correlated) with Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Ceres Power i.e., Ceres Power and Varta AG go up and down completely randomly.
Pair Corralation between Ceres Power and Varta AG
Assuming the 90 days trading horizon Ceres Power Holdings is expected to under-perform the Varta AG. But the stock apears to be less risky and, when comparing its historical volatility, Ceres Power Holdings is 2.09 times less risky than Varta AG. The stock trades about -0.26 of its potential returns per unit of risk. The Varta AG is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Varta AG on December 1, 2024 and sell it today you would earn a total of 47.00 from holding Varta AG or generate 51.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ceres Power Holdings vs. Varta AG
Performance |
| Timeline |
| Ceres Power Holdings |
| Varta AG |
Ceres Power and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceres Power and Varta AG
The main advantage of trading using opposite Ceres Power and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceres Power position performs unexpectedly, Varta 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 Varta AG will offset losses from the drop in Varta AG's long position.| Ceres Power vs. Delta Electronics Public | Ceres Power vs. YASKAWA ELEC UNSP | Ceres Power vs. Plug Power | Ceres Power vs. VERTIV HOLCL A |
| Varta AG vs. MIRAMAR HOTEL INV | Varta AG vs. EMPEROR ENT HOTEL | Varta AG vs. PPHE HOTEL GROUP | Varta AG vs. INVITATION HOMES DL |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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