Correlation Between TOMBADOR IRON and Varta AG

Can any of the company-specific risk be diversified away by investing in both TOMBADOR IRON and Varta AG 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 Varta AG 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 Varta AG, you can compare the effects of market volatilities on TOMBADOR IRON and Varta AG 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 Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOMBADOR IRON and Varta AG.

Diversification Opportunities for TOMBADOR IRON and Varta AG

0.0

Correlation Coefficient

TOMBADOR IRON  Varta AG

Pay attention - limited upside

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

Pair Corralation between TOMBADOR IRON and Varta AG

Assuming the 90 days horizon TOMBADOR IRON LTD is expected to generate 5.05 times more return on investment than Varta AG. However, TOMBADOR IRON is 5.05 times more volatile than Varta AG. It trades about 0.04 of its potential returns per unit of risk. Varta AG is currently generating about -0.01 per unit of risk. If you would invest  0.90  in TOMBADOR IRON LTD on October 9, 2024 and sell it today you would earn a total of  9.10  from holding TOMBADOR IRON LTD or generate 1011.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.81%
Values	Daily Returns

TOMBADOR IRON LTD  vs.  Varta AG

TOMBADOR IRON LTD

Risk-Adjusted Performance

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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.

Varta AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TOMBADOR IRON and Varta AG

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

The idea behind TOMBADOR IRON LTD and Varta 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.