Correlation Between TOHOKU EL and EnviTec Biogas
Can any of the company-specific risk be diversified away by investing in both TOHOKU EL and EnviTec Biogas 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 TOHOKU EL and EnviTec Biogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOHOKU EL PWR and EnviTec Biogas AG, you can compare the effects of market volatilities on TOHOKU EL and EnviTec Biogas 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 TOHOKU EL with a short position of EnviTec Biogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOHOKU EL and EnviTec Biogas.
Diversification Opportunities for TOHOKU EL and EnviTec Biogas
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TOHOKU and EnviTec is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding TOHOKU EL PWR and EnviTec Biogas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnviTec Biogas AG and TOHOKU EL 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 TOHOKU EL PWR are associated (or correlated) with EnviTec Biogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnviTec Biogas AG has no effect on the direction of TOHOKU EL i.e., TOHOKU EL and EnviTec Biogas go up and down completely randomly.
Pair Corralation between TOHOKU EL and EnviTec Biogas
Assuming the 90 days horizon TOHOKU EL PWR is expected to under-perform the EnviTec Biogas. In addition to that, TOHOKU EL is 1.21 times more volatile than EnviTec Biogas AG. It trades about -0.08 of its total potential returns per unit of risk. EnviTec Biogas AG is currently generating about 0.03 per unit of volatility. If you would invest 3,070 in EnviTec Biogas AG on September 12, 2024 and sell it today you would earn a total of 30.00 from holding EnviTec Biogas AG or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOHOKU EL PWR vs. EnviTec Biogas AG
Performance |
| Timeline |
| TOHOKU EL PWR |
| EnviTec Biogas AG |
TOHOKU EL and EnviTec Biogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOHOKU EL and EnviTec Biogas
The main advantage of trading using opposite TOHOKU EL and EnviTec Biogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOHOKU EL position performs unexpectedly, EnviTec Biogas 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 EnviTec Biogas will offset losses from the drop in EnviTec Biogas' long position.| TOHOKU EL vs. GigaMedia | TOHOKU EL vs. Cass Information Systems | TOHOKU EL vs. MICRONIC MYDATA | TOHOKU EL vs. Penn National Gaming |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |