Correlation Between ÜSTRA Hannoversche and Superior Plus

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

Diversification Opportunities for ÜSTRA Hannoversche and Superior Plus

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between ÜSTRA and Superior is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding STRA Hannoversche Verkehrsbetr and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and ÜSTRA Hannoversche 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 STRA Hannoversche Verkehrsbetriebe are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of ÜSTRA Hannoversche i.e., ÜSTRA Hannoversche and Superior Plus go up and down completely randomly.

Pair Corralation between ÜSTRA Hannoversche and Superior Plus

Assuming the 90 days horizon STRA Hannoversche Verkehrsbetriebe is expected to generate 1.58 times more return on investment than Superior Plus. However, ÜSTRA Hannoversche is 1.58 times more volatile than Superior Plus Corp. It trades about -0.02 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.06 per unit of risk. If you would invest  1,200  in STRA Hannoversche Verkehrsbetriebe on September 5, 2024 and sell it today you would lose (260.00) from holding STRA Hannoversche Verkehrsbetriebe or give up 21.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

STRA Hannoversche Verkehrsbetr  vs.  Superior Plus Corp

 Performance 
       Timeline  
ÜSTRA Hannoversche 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STRA Hannoversche Verkehrsbetriebe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Superior Plus Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ÜSTRA Hannoversche and Superior Plus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ÜSTRA Hannoversche and Superior Plus

The main advantage of trading using opposite ÜSTRA Hannoversche and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ÜSTRA Hannoversche position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.
The idea behind STRA Hannoversche Verkehrsbetriebe and Superior Plus Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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