Correlation Between CENTR Brands and Hyrican Informationssyst

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

By analyzing existing cross correlation between CENTR Brands Corp and Hyrican Informationssysteme Aktiengesellschaft, you can compare the effects of market volatilities on CENTR Brands and Hyrican Informationssyst 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 CENTR Brands with a short position of Hyrican Informationssyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTR Brands and Hyrican Informationssyst.

Diversification Opportunities for CENTR Brands and Hyrican Informationssyst

-0.1

Correlation Coefficient

CENTR Brands  Hyrican Informationssyst

Good diversification

The 3 months correlation between CENTR and Hyrican is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CENTR Brands Corp and Hyrican Informationssysteme Ak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyrican Informationssyst and CENTR Brands 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 CENTR Brands Corp are associated (or correlated) with Hyrican Informationssyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyrican Informationssyst has no effect on the direction of CENTR Brands i.e., CENTR Brands and Hyrican Informationssyst go up and down completely randomly.

Pair Corralation between CENTR Brands and Hyrican Informationssyst

Assuming the 90 days horizon CENTR Brands Corp is expected to generate 835.52 times more return on investment than Hyrican Informationssyst. However, CENTR Brands is 835.52 times more volatile than Hyrican Informationssysteme Aktiengesellschaft. It trades about 0.27 of its potential returns per unit of risk. Hyrican Informationssysteme Aktiengesellschaft is currently generating about -0.1 per unit of risk. If you would invest  5.50  in CENTR Brands Corp on October 26, 2024 and sell it today you would lose (0.34) from holding CENTR Brands Corp or give up 6.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.22%
Values	Daily Returns

CENTR Brands Corp  vs.  Hyrican Informationssysteme Ak

CENTR Brands Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CENTR Brands Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CENTR Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Hyrican Informationssyst

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CENTR Brands and Hyrican Informationssyst

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

The idea behind CENTR Brands Corp and Hyrican Informationssysteme Aktiengesellschaft 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.