Correlation Between EnviTec Biogas and TOHOKU EL
Can any of the company-specific risk be diversified away by investing in both EnviTec Biogas and TOHOKU EL 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 EnviTec Biogas and TOHOKU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnviTec Biogas AG and TOHOKU EL PWR, you can compare the effects of market volatilities on EnviTec Biogas and TOHOKU EL 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 EnviTec Biogas with a short position of TOHOKU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnviTec Biogas and TOHOKU EL.
Diversification Opportunities for EnviTec Biogas and TOHOKU EL
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EnviTec and TOHOKU is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding EnviTec Biogas AG and TOHOKU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOHOKU EL PWR and EnviTec Biogas 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 EnviTec Biogas AG are associated (or correlated) with TOHOKU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOHOKU EL PWR has no effect on the direction of EnviTec Biogas i.e., EnviTec Biogas and TOHOKU EL go up and down completely randomly.
Pair Corralation between EnviTec Biogas and TOHOKU EL
Assuming the 90 days horizon EnviTec Biogas AG is expected to generate 0.84 times more return on investment than TOHOKU EL. However, EnviTec Biogas AG is 1.18 times less risky than TOHOKU EL. It trades about 0.0 of its potential returns per unit of risk. TOHOKU EL PWR is currently generating about -0.09 per unit of risk. If you would invest 2,950 in EnviTec Biogas AG on November 2, 2024 and sell it today you would lose (10.00) from holding EnviTec Biogas AG or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnviTec Biogas AG vs. TOHOKU EL PWR
Performance |
| Timeline |
| EnviTec Biogas AG |
| TOHOKU EL PWR |
EnviTec Biogas and TOHOKU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnviTec Biogas and TOHOKU EL
The main advantage of trading using opposite EnviTec Biogas and TOHOKU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnviTec Biogas position performs unexpectedly, TOHOKU EL 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 TOHOKU EL will offset losses from the drop in TOHOKU EL's long position.| EnviTec Biogas vs. Ormat Technologies | EnviTec Biogas vs. Neoen SA | EnviTec Biogas vs. Encavis AG | EnviTec Biogas vs. TOHOKU EL PWR |
| TOHOKU EL vs. Ormat Technologies | TOHOKU EL vs. Neoen SA | TOHOKU EL vs. Encavis AG | TOHOKU EL vs. BEIJJINGNENG CLERGHYC1 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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