Correlation Between COFACE SA and MUENCHRUECKUNSADR

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

By analyzing existing cross correlation between COFACE SA and MUENCHRUECKUNSADR 110, you can compare the effects of market volatilities on COFACE SA and MUENCHRUECKUNSADR 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 COFACE SA with a short position of MUENCHRUECKUNSADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFACE SA and MUENCHRUECKUNSADR.

Diversification Opportunities for COFACE SA and MUENCHRUECKUNSADR

-0.29

Correlation Coefficient

COFACE SA  MUENCHRUECKUNSADR

Very good diversification

The 3 months correlation between COFACE and MUENCHRUECKUNSADR is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding COFACE SA and MUENCHRUECKUNSADR 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUENCHRUECKUNSADR 110 and COFACE SA 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 COFACE SA are associated (or correlated) with MUENCHRUECKUNSADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUENCHRUECKUNSADR 110 has no effect on the direction of COFACE SA i.e., COFACE SA and MUENCHRUECKUNSADR go up and down completely randomly.

Pair Corralation between COFACE SA and MUENCHRUECKUNSADR

Assuming the 90 days horizon COFACE SA is expected to generate 1.96 times less return on investment than MUENCHRUECKUNSADR. But when comparing it to its historical volatility, COFACE SA is 1.0 times less risky than MUENCHRUECKUNSADR. It trades about 0.04 of its potential returns per unit of risk. MUENCHRUECKUNSADR 110 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  627.00  in MUENCHRUECKUNSADR 110 on October 12, 2024 and sell it today you would earn a total of  403.00  from holding MUENCHRUECKUNSADR 110 or generate 64.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.75%
Values	Daily Returns

COFACE SA  vs.  MUENCHRUECKUNSADR 110

COFACE SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

MUENCHRUECKUNSADR 110

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MUENCHRUECKUNSADR 110 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MUENCHRUECKUNSADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with COFACE SA and MUENCHRUECKUNSADR

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

The idea behind COFACE SA and MUENCHRUECKUNSADR 110 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 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.