Correlation Between DAX Index and IMAGIN MEDICAL

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

Diversification Opportunities for DAX Index and IMAGIN MEDICAL

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Assuming the 90 days trading horizon DAX Index is expected to generate 130.55 times less return on investment than IMAGIN MEDICAL. But when comparing it to its historical volatility, DAX Index is 107.58 times less risky than IMAGIN MEDICAL. It trades about 0.08 of its potential returns per unit of risk. IMAGIN MEDICAL INC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.75  in IMAGIN MEDICAL INC on August 25, 2024 and sell it today you would lose (0.70) from holding IMAGIN MEDICAL INC or give up 93.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.57%
ValuesDaily Returns

DAX Index  vs.  IMAGIN MEDICAL INC

 Performance 
       Timeline  

DAX Index and IMAGIN MEDICAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAX Index and IMAGIN MEDICAL

The main advantage of trading using opposite DAX Index and IMAGIN MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, IMAGIN MEDICAL 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 IMAGIN MEDICAL will offset losses from the drop in IMAGIN MEDICAL's long position.
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The idea behind DAX Index and IMAGIN MEDICAL INC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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