Correlation Between DEUTSCHE WOHNEN and CN MODERN
Can any of the company-specific risk be diversified away by investing in both DEUTSCHE WOHNEN and CN MODERN 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 DEUTSCHE WOHNEN and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DEUTSCHE WOHNEN ADRS12 and CN MODERN DAIRY, you can compare the effects of market volatilities on DEUTSCHE WOHNEN and CN MODERN 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 DEUTSCHE WOHNEN with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEUTSCHE WOHNEN and CN MODERN.
Diversification Opportunities for DEUTSCHE WOHNEN and CN MODERN
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between DEUTSCHE and 07M is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE WOHNEN ADRS12 and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN ADRS12 are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of DEUTSCHE WOHNEN i.e., DEUTSCHE WOHNEN and CN MODERN go up and down completely randomly.
Pair Corralation between DEUTSCHE WOHNEN and CN MODERN
Assuming the 90 days trading horizon DEUTSCHE WOHNEN ADRS12 is expected to generate 0.79 times more return on investment than CN MODERN. However, DEUTSCHE WOHNEN ADRS12 is 1.26 times less risky than CN MODERN. It trades about -0.01 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about -0.18 per unit of risk. If you would invest 1,130 in DEUTSCHE WOHNEN ADRS12 on October 29, 2024 and sell it today you would lose (10.00) from holding DEUTSCHE WOHNEN ADRS12 or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DEUTSCHE WOHNEN ADRS12 vs. CN MODERN DAIRY
Performance |
| Timeline |
| DEUTSCHE WOHNEN ADRS12 |
| CN MODERN DAIRY |
DEUTSCHE WOHNEN and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DEUTSCHE WOHNEN and CN MODERN
The main advantage of trading using opposite DEUTSCHE WOHNEN and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DEUTSCHE WOHNEN position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| DEUTSCHE WOHNEN vs. PLANT VEDA FOODS | DEUTSCHE WOHNEN vs. PATTIES FOODS | DEUTSCHE WOHNEN vs. Amkor Technology | DEUTSCHE WOHNEN vs. Maple Leaf Foods |
| CN MODERN vs. Keck Seng Investments | CN MODERN vs. MGIC INVESTMENT | CN MODERN vs. BE Semiconductor Industries | CN MODERN vs. FIRST SAVINGS FINL |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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