Correlation Between GEAR4MUSIC and OSRAM LICHT
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC and OSRAM LICHT 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 GEAR4MUSIC and OSRAM LICHT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and OSRAM LICHT N, you can compare the effects of market volatilities on GEAR4MUSIC and OSRAM LICHT 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 GEAR4MUSIC with a short position of OSRAM LICHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and OSRAM LICHT.
Diversification Opportunities for GEAR4MUSIC and OSRAM LICHT
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GEAR4MUSIC and OSRAM is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N and GEAR4MUSIC 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 GEAR4MUSIC LS 10 are associated (or correlated) with OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of GEAR4MUSIC i.e., GEAR4MUSIC and OSRAM LICHT go up and down completely randomly.
Pair Corralation between GEAR4MUSIC and OSRAM LICHT
Assuming the 90 days horizon GEAR4MUSIC LS 10 is expected to generate 4.93 times more return on investment than OSRAM LICHT. However, GEAR4MUSIC is 4.93 times more volatile than OSRAM LICHT N. It trades about 0.04 of its potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.07 per unit of risk. If you would invest 166.00 in GEAR4MUSIC LS 10 on September 4, 2024 and sell it today you would earn a total of 29.00 from holding GEAR4MUSIC LS 10 or generate 17.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. OSRAM LICHT N
Performance |
| Timeline |
| GEAR4MUSIC LS 10 |
| OSRAM LICHT N |
GEAR4MUSIC and OSRAM LICHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC and OSRAM LICHT
The main advantage of trading using opposite GEAR4MUSIC and OSRAM LICHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC position performs unexpectedly, OSRAM LICHT 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 OSRAM LICHT will offset losses from the drop in OSRAM LICHT's long position.| GEAR4MUSIC vs. Amazon Inc | GEAR4MUSIC vs. Alibaba Group Holdings | GEAR4MUSIC vs. JD Inc | GEAR4MUSIC vs. Superior Plus Corp |
| OSRAM LICHT vs. Delta Electronics Public | OSRAM LICHT vs. YASKAWA ELEC UNSP | OSRAM LICHT vs. VERTIV HOLCL A |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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