Correlation Between CREO MEDICAL and ÖKOWORLD

Can any of the company-specific risk be diversified away by investing in both CREO MEDICAL and ÖKOWORLD 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 CREO MEDICAL and ÖKOWORLD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CREO MEDICAL GRP and KOWORLD AG, you can compare the effects of market volatilities on CREO MEDICAL and ÖKOWORLD 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 CREO MEDICAL with a short position of ÖKOWORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREO MEDICAL and ÖKOWORLD.

Diversification Opportunities for CREO MEDICAL and ÖKOWORLD

0.45

Correlation Coefficient

CREO MEDICAL  ÖKOWORLD

Very weak diversification

The 3 months correlation between CREO and ÖKOWORLD is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CREO MEDICAL GRP and KOWORLD AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOWORLD AG and CREO MEDICAL 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 CREO MEDICAL GRP are associated (or correlated) with ÖKOWORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOWORLD AG has no effect on the direction of CREO MEDICAL i.e., CREO MEDICAL and ÖKOWORLD go up and down completely randomly.

Pair Corralation between CREO MEDICAL and ÖKOWORLD

Assuming the 90 days horizon CREO MEDICAL GRP is expected to under-perform the ÖKOWORLD. In addition to that, CREO MEDICAL is 2.19 times more volatile than KOWORLD AG. It trades about -0.05 of its total potential returns per unit of risk. KOWORLD AG is currently generating about -0.01 per unit of volatility. If you would invest  2,870  in KOWORLD AG on October 8, 2024 and sell it today you would lose (70.00) from holding KOWORLD AG or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CREO MEDICAL GRP  vs.  KOWORLD AG

CREO MEDICAL GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CREO MEDICAL GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

KOWORLD AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KOWORLD AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ÖKOWORLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CREO MEDICAL and ÖKOWORLD

The main advantage of trading using opposite CREO MEDICAL and ÖKOWORLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CREO MEDICAL position performs unexpectedly, ÖKOWORLD 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 ÖKOWORLD will offset losses from the drop in ÖKOWORLD's long position.

The idea behind CREO MEDICAL GRP and KOWORLD AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.