Correlation Between HOCHTIEF Aktiengesellscha and Travis Perkins
Can any of the company-specific risk be diversified away by investing in both HOCHTIEF Aktiengesellscha and Travis Perkins 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 HOCHTIEF Aktiengesellscha and Travis Perkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOCHTIEF Aktiengesellschaft and Travis Perkins PLC, you can compare the effects of market volatilities on HOCHTIEF Aktiengesellscha and Travis Perkins 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 HOCHTIEF Aktiengesellscha with a short position of Travis Perkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOCHTIEF Aktiengesellscha and Travis Perkins.
Diversification Opportunities for HOCHTIEF Aktiengesellscha and Travis Perkins
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HOCHTIEF and Travis is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding HOCHTIEF Aktiengesellschaft and Travis Perkins PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travis Perkins PLC and HOCHTIEF Aktiengesellscha 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 HOCHTIEF Aktiengesellschaft are associated (or correlated) with Travis Perkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travis Perkins PLC has no effect on the direction of HOCHTIEF Aktiengesellscha i.e., HOCHTIEF Aktiengesellscha and Travis Perkins go up and down completely randomly.
Pair Corralation between HOCHTIEF Aktiengesellscha and Travis Perkins
Assuming the 90 days horizon HOCHTIEF Aktiengesellschaft is expected to generate 0.37 times more return on investment than Travis Perkins. However, HOCHTIEF Aktiengesellschaft is 2.67 times less risky than Travis Perkins. It trades about 0.07 of its potential returns per unit of risk. Travis Perkins PLC is currently generating about -0.1 per unit of risk. If you would invest 12,236 in HOCHTIEF Aktiengesellschaft on September 4, 2024 and sell it today you would earn a total of 479.00 from holding HOCHTIEF Aktiengesellschaft or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
HOCHTIEF Aktiengesellschaft vs. Travis Perkins PLC
Performance |
| Timeline |
| HOCHTIEF Aktiengesellscha |
| Travis Perkins PLC |
HOCHTIEF Aktiengesellscha and Travis Perkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOCHTIEF Aktiengesellscha and Travis Perkins
The main advantage of trading using opposite HOCHTIEF Aktiengesellscha and Travis Perkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOCHTIEF Aktiengesellscha position performs unexpectedly, Travis Perkins 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 Travis Perkins will offset losses from the drop in Travis Perkins' long position.The idea behind HOCHTIEF Aktiengesellschaft and Travis Perkins PLC 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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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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