Correlation Between HAMMONIA Schiffsholding and EBay
Can any of the company-specific risk be diversified away by investing in both HAMMONIA Schiffsholding and EBay 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 HAMMONIA Schiffsholding and EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HAMMONIA Schiffsholding AG and eBay Inc, you can compare the effects of market volatilities on HAMMONIA Schiffsholding and EBay 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 HAMMONIA Schiffsholding with a short position of EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of HAMMONIA Schiffsholding and EBay.
Diversification Opportunities for HAMMONIA Schiffsholding and EBay
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HAMMONIA and EBay is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding HAMMONIA Schiffsholding AG and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and HAMMONIA Schiffsholding 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 HAMMONIA Schiffsholding AG are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of HAMMONIA Schiffsholding i.e., HAMMONIA Schiffsholding and EBay go up and down completely randomly.
Pair Corralation between HAMMONIA Schiffsholding and EBay
Assuming the 90 days trading horizon HAMMONIA Schiffsholding is expected to generate 1.87 times less return on investment than EBay. In addition to that, HAMMONIA Schiffsholding is 1.59 times more volatile than eBay Inc. It trades about 0.02 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.07 per unit of volatility. If you would invest 4,130 in eBay Inc on August 31, 2024 and sell it today you would earn a total of 1,994 from holding eBay Inc or generate 48.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.16% |
| Values | Daily Returns |
HAMMONIA Schiffsholding AG vs. eBay Inc
Performance |
| Timeline |
| HAMMONIA Schiffsholding |
| eBay Inc |
HAMMONIA Schiffsholding and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HAMMONIA Schiffsholding and EBay
The main advantage of trading using opposite HAMMONIA Schiffsholding and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HAMMONIA Schiffsholding position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.The idea behind HAMMONIA Schiffsholding AG and eBay 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.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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