Correlation Between CODERE ONLINE and SDAX Index

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

Diversification Opportunities for CODERE ONLINE and SDAX Index

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between CODERE and SDAX is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CODERE ONLINE LUX and SDAX Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SDAX Index and CODERE ONLINE 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 CODERE ONLINE LUX are associated (or correlated) with SDAX Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SDAX Index has no effect on the direction of CODERE ONLINE i.e., CODERE ONLINE and SDAX Index go up and down completely randomly.
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Pair Corralation between CODERE ONLINE and SDAX Index

Assuming the 90 days horizon CODERE ONLINE LUX is expected to under-perform the SDAX Index. In addition to that, CODERE ONLINE is 3.99 times more volatile than SDAX Index. It trades about -0.07 of its total potential returns per unit of risk. SDAX Index is currently generating about 0.13 per unit of volatility. If you would invest  1,338,325  in SDAX Index on October 9, 2024 and sell it today you would earn a total of  62,511  from holding SDAX Index or generate 4.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy97.37%
ValuesDaily Returns

CODERE ONLINE LUX  vs.  SDAX Index

 Performance 
       Timeline  

CODERE ONLINE and SDAX Index Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CODERE ONLINE and SDAX Index

The main advantage of trading using opposite CODERE ONLINE and SDAX Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CODERE ONLINE position performs unexpectedly, SDAX Index 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 SDAX Index will offset losses from the drop in SDAX Index's long position.
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The idea behind CODERE ONLINE LUX and SDAX Index 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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