Correlation Between Gelsenwasser and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Gelsenwasser and Iridium Communications 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 Gelsenwasser and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gelsenwasser AG and Iridium Communications, you can compare the effects of market volatilities on Gelsenwasser and Iridium Communications 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 Gelsenwasser with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gelsenwasser and Iridium Communications.
Diversification Opportunities for Gelsenwasser and Iridium Communications
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gelsenwasser and Iridium is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and Gelsenwasser 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 Gelsenwasser AG are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Gelsenwasser i.e., Gelsenwasser and Iridium Communications go up and down completely randomly.
Pair Corralation between Gelsenwasser and Iridium Communications
Assuming the 90 days horizon Gelsenwasser AG is expected to generate 1.09 times more return on investment than Iridium Communications. However, Gelsenwasser is 1.09 times more volatile than Iridium Communications. It trades about -0.05 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.06 per unit of risk. If you would invest 99,419 in Gelsenwasser AG on August 30, 2024 and sell it today you would lose (48,419) from holding Gelsenwasser AG or give up 48.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gelsenwasser AG vs. Iridium Communications
Performance |
| Timeline |
| Gelsenwasser AG |
| Iridium Communications |
Gelsenwasser and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gelsenwasser and Iridium Communications
The main advantage of trading using opposite Gelsenwasser and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gelsenwasser position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Gelsenwasser vs. Guangdong Investment Limited | Gelsenwasser vs. TTW Public | Gelsenwasser vs. Superior Plus Corp | Gelsenwasser vs. SIVERS SEMICONDUCTORS AB |
| Iridium Communications vs. Verizon Communications | Iridium Communications vs. ATT Inc | Iridium Communications vs. ATT Inc | Iridium Communications vs. Deutsche Telekom AG |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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