Correlation Between Thyssenkrupp and CeoTronics
Can any of the company-specific risk be diversified away by investing in both Thyssenkrupp and CeoTronics 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 Thyssenkrupp and CeoTronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between thyssenkrupp AG and CeoTronics AG, you can compare the effects of market volatilities on Thyssenkrupp and CeoTronics 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 Thyssenkrupp with a short position of CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and CeoTronics.
Diversification Opportunities for Thyssenkrupp and CeoTronics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thyssenkrupp and CeoTronics is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding thyssenkrupp AG and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG and Thyssenkrupp 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 thyssenkrupp AG are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Thyssenkrupp i.e., Thyssenkrupp and CeoTronics go up and down completely randomly.
Pair Corralation between Thyssenkrupp and CeoTronics
Assuming the 90 days trading horizon thyssenkrupp AG is expected to generate 0.87 times more return on investment than CeoTronics. However, thyssenkrupp AG is 1.14 times less risky than CeoTronics. It trades about 0.24 of its potential returns per unit of risk. CeoTronics AG is currently generating about 0.11 per unit of risk. If you would invest 334.00 in thyssenkrupp AG on September 19, 2024 and sell it today you would earn a total of 66.00 from holding thyssenkrupp AG or generate 19.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
thyssenkrupp AG vs. CeoTronics AG
Performance |
| Timeline |
| thyssenkrupp AG |
| CeoTronics AG |
Thyssenkrupp and CeoTronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thyssenkrupp and CeoTronics
The main advantage of trading using opposite Thyssenkrupp and CeoTronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thyssenkrupp position performs unexpectedly, CeoTronics 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 CeoTronics will offset losses from the drop in CeoTronics' long position.| Thyssenkrupp vs. CeoTronics AG | Thyssenkrupp vs. Tencent Music Entertainment | Thyssenkrupp vs. CNVISION MEDIA | Thyssenkrupp vs. Seven West Media |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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