Correlation Between FLAT GLASS and Centrotec

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

By analyzing existing cross correlation between FLAT GLASS GROUP and Centrotec SE, you can compare the effects of market volatilities on FLAT GLASS and Centrotec 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 FLAT GLASS with a short position of Centrotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLAT GLASS and Centrotec.

Diversification Opportunities for FLAT GLASS and Centrotec

0.2

Correlation Coefficient

FLAT GLASS  Centrotec

Modest diversification

The 3 months correlation between FLAT and Centrotec is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding FLAT GLASS GROUP and Centrotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrotec SE and FLAT GLASS 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 FLAT GLASS GROUP are associated (or correlated) with Centrotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrotec SE has no effect on the direction of FLAT GLASS i.e., FLAT GLASS and Centrotec go up and down completely randomly.

Pair Corralation between FLAT GLASS and Centrotec

Assuming the 90 days horizon FLAT GLASS GROUP is expected to generate 3.3 times more return on investment than Centrotec. However, FLAT GLASS is 3.3 times more volatile than Centrotec SE. It trades about 0.02 of its potential returns per unit of risk. Centrotec SE is currently generating about 0.0 per unit of risk. If you would invest  126.00  in FLAT GLASS GROUP on September 26, 2024 and sell it today you would earn a total of  8.00  from holding FLAT GLASS GROUP or generate 6.35% return on investment over 90 days.

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

FLAT GLASS GROUP  vs.  Centrotec SE

FLAT GLASS GROUP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FLAT GLASS GROUP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FLAT GLASS reported solid returns over the last few months and may actually be approaching a breakup point.

Centrotec SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centrotec SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Centrotec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FLAT GLASS and Centrotec

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

The idea behind FLAT GLASS GROUP and Centrotec SE 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.

Check out your portfolio center.

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.