Correlation Between Varta AG and MULTI-CHEM
Can any of the company-specific risk be diversified away by investing in both Varta AG and MULTI-CHEM 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 Varta AG and MULTI-CHEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and MULTI CHEM LTD, you can compare the effects of market volatilities on Varta AG and MULTI-CHEM 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 Varta AG with a short position of MULTI-CHEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and MULTI-CHEM.
Diversification Opportunities for Varta AG and MULTI-CHEM
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Varta and MULTI-CHEM is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and MULTI CHEM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI CHEM LTD and Varta AG 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 Varta AG are associated (or correlated) with MULTI-CHEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI CHEM LTD has no effect on the direction of Varta AG i.e., Varta AG and MULTI-CHEM go up and down completely randomly.
Pair Corralation between Varta AG and MULTI-CHEM
Assuming the 90 days trading horizon Varta AG is expected to under-perform the MULTI-CHEM. In addition to that, Varta AG is 1.92 times more volatile than MULTI CHEM LTD. It trades about -0.37 of its total potential returns per unit of risk. MULTI CHEM LTD is currently generating about 0.06 per unit of volatility. If you would invest 184.00 in MULTI CHEM LTD on September 1, 2024 and sell it today you would earn a total of 6.00 from holding MULTI CHEM LTD or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Varta AG vs. MULTI CHEM LTD
Performance |
| Timeline |
| Varta AG |
| MULTI CHEM LTD |
Varta AG and MULTI-CHEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and MULTI-CHEM
The main advantage of trading using opposite Varta AG and MULTI-CHEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG position performs unexpectedly, MULTI-CHEM 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 MULTI-CHEM will offset losses from the drop in MULTI-CHEM's long position.| Varta AG vs. Cogent Communications Holdings | Varta AG vs. Scandinavian Tobacco Group | Varta AG vs. IMPERIAL TOBACCO | Varta AG vs. American Airlines Group |
| MULTI-CHEM vs. JAPAN AIRLINES | MULTI-CHEM vs. SOUTHWEST AIRLINES | MULTI-CHEM vs. LEGACY IRON ORE | MULTI-CHEM vs. AEGEAN AIRLINES |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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