Correlation Between Commercial Vehicle and DATA MODUL
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle and DATA MODUL 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 Commercial Vehicle and DATA MODUL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and DATA MODUL , you can compare the effects of market volatilities on Commercial Vehicle and DATA MODUL 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 Commercial Vehicle with a short position of DATA MODUL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and DATA MODUL.
Diversification Opportunities for Commercial Vehicle and DATA MODUL
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commercial and DATA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and DATA MODUL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATA MODUL and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with DATA MODUL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATA MODUL has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and DATA MODUL go up and down completely randomly.
Pair Corralation between Commercial Vehicle and DATA MODUL
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the DATA MODUL. In addition to that, Commercial Vehicle is 1.67 times more volatile than DATA MODUL . It trades about -0.17 of its total potential returns per unit of risk. DATA MODUL is currently generating about -0.22 per unit of volatility. If you would invest 2,720 in DATA MODUL on November 5, 2024 and sell it today you would lose (220.00) from holding DATA MODUL or give up 8.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. DATA MODUL
Performance |
| Timeline |
| Commercial Vehicle |
| DATA MODUL |
Commercial Vehicle and DATA MODUL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and DATA MODUL
The main advantage of trading using opposite Commercial Vehicle and DATA MODUL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle position performs unexpectedly, DATA MODUL 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 DATA MODUL will offset losses from the drop in DATA MODUL's long position.| Commercial Vehicle vs. SIVERS SEMICONDUCTORS AB | Commercial Vehicle vs. NorAm Drilling AS | Commercial Vehicle vs. Volkswagen AG | Commercial Vehicle vs. Darden Restaurants |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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