Correlation Between Dover and Aumann AG
Can any of the company-specific risk be diversified away by investing in both Dover and Aumann 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 Dover and Aumann AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dover and Aumann AG, you can compare the effects of market volatilities on Dover and Aumann 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 Dover with a short position of Aumann AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dover and Aumann AG.
Diversification Opportunities for Dover and Aumann AG
Excellent diversification
The 3 months correlation between Dover and Aumann is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dover and Aumann AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumann AG and Dover 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 Dover are associated (or correlated) with Aumann AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumann AG has no effect on the direction of Dover i.e., Dover and Aumann AG go up and down completely randomly.
Pair Corralation between Dover and Aumann AG
Considering the 90-day investment horizon Dover is expected to generate 0.47 times more return on investment than Aumann AG. However, Dover is 2.12 times less risky than Aumann AG. It trades about 0.13 of its potential returns per unit of risk. Aumann AG is currently generating about -0.06 per unit of risk. If you would invest 13,079 in Dover on September 1, 2024 and sell it today you would earn a total of 7,511 from holding Dover or generate 57.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 58.36% |
| Values | Daily Returns |
Dover vs. Aumann AG
Performance |
| Timeline |
| Dover |
| Aumann AG |
Dover and Aumann AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dover and Aumann AG
The main advantage of trading using opposite Dover and Aumann AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dover position performs unexpectedly, Aumann 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 Aumann AG will offset losses from the drop in Aumann AG's long position.The idea behind Dover and Aumann 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.| Aumann AG vs. Alfa Laval AB | Aumann AG vs. Arista Power | Aumann AG vs. Atlas Copco AB | Aumann AG vs. American Commerce Solutions |
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 Stocks Directory module to find actively traded stocks across global markets.
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