Correlation Between TOMBADOR IRON and OSRAM LICHT

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

By analyzing existing cross correlation between TOMBADOR IRON LTD and OSRAM LICHT N, you can compare the effects of market volatilities on TOMBADOR IRON and OSRAM LICHT 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 TOMBADOR IRON with a short position of OSRAM LICHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOMBADOR IRON and OSRAM LICHT.

Diversification Opportunities for TOMBADOR IRON and OSRAM LICHT

0.0

Correlation Coefficient

TOMBADOR IRON  OSRAM LICHT

Pay attention - limited upside

The 3 months correlation between TOMBADOR and OSRAM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TOMBADOR IRON LTD and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N and TOMBADOR IRON 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 TOMBADOR IRON LTD are associated (or correlated) with OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of TOMBADOR IRON i.e., TOMBADOR IRON and OSRAM LICHT go up and down completely randomly.

Pair Corralation between TOMBADOR IRON and OSRAM LICHT

If you would invest  5,160  in OSRAM LICHT N on December 21, 2024 and sell it today you would earn a total of  60.00  from holding OSRAM LICHT N or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

TOMBADOR IRON LTD  vs.  OSRAM LICHT N

TOMBADOR IRON LTD

Risk-Adjusted Performance

Very Weak

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

OSRAM LICHT N

Risk-Adjusted Performance

OK

Over the last 90 days OSRAM LICHT N has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, OSRAM LICHT is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TOMBADOR IRON and OSRAM LICHT

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

The idea behind TOMBADOR IRON LTD and OSRAM LICHT N 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.