Correlation Between LIFE + and Maschinenfabrik Berthold

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

By analyzing existing cross correlation between LIFE BANC SPLIT and Maschinenfabrik Berthold Hermle, you can compare the effects of market volatilities on LIFE + and Maschinenfabrik Berthold 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 LIFE + with a short position of Maschinenfabrik Berthold. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE + and Maschinenfabrik Berthold.

Diversification Opportunities for LIFE + and Maschinenfabrik Berthold

-0.84

Correlation Coefficient

LIFE +  Maschinenfabrik Berthold

Pay attention - limited upside

The 3 months correlation between LIFE and Maschinenfabrik is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and Maschinenfabrik Berthold Herml in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maschinenfabrik Berthold and LIFE + 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 LIFE BANC SPLIT are associated (or correlated) with Maschinenfabrik Berthold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maschinenfabrik Berthold has no effect on the direction of LIFE + i.e., LIFE + and Maschinenfabrik Berthold go up and down completely randomly.

Pair Corralation between LIFE + and Maschinenfabrik Berthold

Assuming the 90 days horizon LIFE BANC SPLIT is expected to generate 2.01 times more return on investment than Maschinenfabrik Berthold. However, LIFE + is 2.01 times more volatile than Maschinenfabrik Berthold Hermle. It trades about 0.07 of its potential returns per unit of risk. Maschinenfabrik Berthold Hermle is currently generating about -0.13 per unit of risk. If you would invest  486.00  in LIFE BANC SPLIT on September 30, 2024 and sell it today you would earn a total of  114.00  from holding LIFE BANC SPLIT or generate 23.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

LIFE BANC SPLIT  vs.  Maschinenfabrik Berthold Herml

LIFE BANC SPLIT

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LIFE BANC SPLIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, LIFE + reported solid returns over the last few months and may actually be approaching a breakup point.

Maschinenfabrik Berthold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with LIFE + and Maschinenfabrik Berthold

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

The idea behind LIFE BANC SPLIT and Maschinenfabrik Berthold Hermle 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.