Correlation Between Mhlbauer Holding and XAAR PLC
Can any of the company-specific risk be diversified away by investing in both Mhlbauer Holding and XAAR PLC 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 Mhlbauer Holding and XAAR PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mhlbauer Holding AG and XAAR PLC LS 10, you can compare the effects of market volatilities on Mhlbauer Holding and XAAR PLC 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 Mhlbauer Holding with a short position of XAAR PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mhlbauer Holding and XAAR PLC.
Diversification Opportunities for Mhlbauer Holding and XAAR PLC
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mhlbauer and XAAR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mhlbauer Holding AG and XAAR PLC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAAR PLC LS and Mhlbauer Holding 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 Mhlbauer Holding AG are associated (or correlated) with XAAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAAR PLC LS has no effect on the direction of Mhlbauer Holding i.e., Mhlbauer Holding and XAAR PLC go up and down completely randomly.
Pair Corralation between Mhlbauer Holding and XAAR PLC
Assuming the 90 days trading horizon Mhlbauer Holding AG is expected to generate 0.48 times more return on investment than XAAR PLC. However, Mhlbauer Holding AG is 2.08 times less risky than XAAR PLC. It trades about -0.05 of its potential returns per unit of risk. XAAR PLC LS 10 is currently generating about -0.03 per unit of risk. If you would invest 5,951 in Mhlbauer Holding AG on November 19, 2024 and sell it today you would lose (1,771) from holding Mhlbauer Holding AG or give up 29.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 78.84% |
| Values | Daily Returns |
Mhlbauer Holding AG vs. XAAR PLC LS 10
Performance |
| Timeline |
| Mhlbauer Holding |
| XAAR PLC LS |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Mhlbauer Holding and XAAR PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mhlbauer Holding and XAAR PLC
The main advantage of trading using opposite Mhlbauer Holding and XAAR PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mhlbauer Holding position performs unexpectedly, XAAR PLC 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 XAAR PLC will offset losses from the drop in XAAR PLC's long position.| Mhlbauer Holding vs. Siamgas And Petrochemicals | Mhlbauer Holding vs. AAC TECHNOLOGHLDGADR | Mhlbauer Holding vs. Columbia Sportswear | Mhlbauer Holding vs. ePlay Digital |
| XAAR PLC vs. International Consolidated Airlines | XAAR PLC vs. United Airlines Holdings | XAAR PLC vs. AEGEAN AIRLINES | XAAR PLC vs. THAI BEVERAGE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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