Correlation Between DAX Index and PACIFIC ONLINE

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Can any of the company-specific risk be diversified away by investing in both DAX Index and PACIFIC ONLINE 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 DAX Index and PACIFIC ONLINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAX Index and PACIFIC ONLINE, you can compare the effects of market volatilities on DAX Index and PACIFIC ONLINE 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 DAX Index with a short position of PACIFIC ONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and PACIFIC ONLINE.

Diversification Opportunities for DAX Index and PACIFIC ONLINE

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between DAX and PACIFIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and PACIFIC ONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC ONLINE and DAX Index 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 DAX Index are associated (or correlated) with PACIFIC ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC ONLINE has no effect on the direction of DAX Index i.e., DAX Index and PACIFIC ONLINE go up and down completely randomly.
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Pair Corralation between DAX Index and PACIFIC ONLINE

If you would invest  15.00  in PACIFIC ONLINE on August 30, 2024 and sell it today you would earn a total of  0.00  from holding PACIFIC ONLINE or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

DAX Index  vs.  PACIFIC ONLINE

 Performance 
       Timeline  

DAX Index and PACIFIC ONLINE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAX Index and PACIFIC ONLINE

The main advantage of trading using opposite DAX Index and PACIFIC ONLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, PACIFIC ONLINE 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 PACIFIC ONLINE will offset losses from the drop in PACIFIC ONLINE's long position.
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The idea behind DAX Index and PACIFIC ONLINE 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.
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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