Correlation Between Endymed and Netz Hotels
Can any of the company-specific risk be diversified away by investing in both Endymed and Netz Hotels 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 Endymed and Netz Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endymed and Netz Hotels, you can compare the effects of market volatilities on Endymed and Netz Hotels 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 Endymed with a short position of Netz Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endymed and Netz Hotels.
Diversification Opportunities for Endymed and Netz Hotels
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Endymed and Netz is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Endymed and Netz Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netz Hotels and Endymed 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 Endymed are associated (or correlated) with Netz Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netz Hotels has no effect on the direction of Endymed i.e., Endymed and Netz Hotels go up and down completely randomly.
Pair Corralation between Endymed and Netz Hotels
Assuming the 90 days trading horizon Endymed is expected to generate 4.98 times less return on investment than Netz Hotels. But when comparing it to its historical volatility, Endymed is 1.54 times less risky than Netz Hotels. It trades about 0.02 of its potential returns per unit of risk. Netz Hotels is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,450 in Netz Hotels on August 29, 2024 and sell it today you would earn a total of 900.00 from holding Netz Hotels or generate 36.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Endymed vs. Netz Hotels
Performance |
| Timeline |
| Endymed |
| Netz Hotels |
Endymed and Netz Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endymed and Netz Hotels
The main advantage of trading using opposite Endymed and Netz Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endymed position performs unexpectedly, Netz Hotels 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 Netz Hotels will offset losses from the drop in Netz Hotels' long position.The idea behind Endymed and Netz Hotels 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.| Netz Hotels vs. Direct Capital Investments | Netz Hotels vs. B Communications | Netz Hotels vs. Holmes Place International | Netz Hotels vs. Nova |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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