Correlation Between SIDETRADE and UMWELTBANK

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

By analyzing existing cross correlation between SIDETRADE EO 1 and UMWELTBANK, you can compare the effects of market volatilities on SIDETRADE and UMWELTBANK 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 SIDETRADE with a short position of UMWELTBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and UMWELTBANK.

Diversification Opportunities for SIDETRADE and UMWELTBANK

-0.16

Correlation Coefficient

SIDETRADE  UMWELTBANK

Good diversification

The 3 months correlation between SIDETRADE and UMWELTBANK is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and UMWELTBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMWELTBANK and SIDETRADE 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 SIDETRADE EO 1 are associated (or correlated) with UMWELTBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMWELTBANK has no effect on the direction of SIDETRADE i.e., SIDETRADE and UMWELTBANK go up and down completely randomly.

Pair Corralation between SIDETRADE and UMWELTBANK

Assuming the 90 days horizon SIDETRADE EO 1 is expected to generate 0.7 times more return on investment than UMWELTBANK. However, SIDETRADE EO 1 is 1.42 times less risky than UMWELTBANK. It trades about 0.03 of its potential returns per unit of risk. UMWELTBANK is currently generating about 0.02 per unit of risk. If you would invest  22,300  in SIDETRADE EO 1 on October 24, 2024 and sell it today you would earn a total of  500.00  from holding SIDETRADE EO 1 or generate 2.24% return on investment over 90 days.

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

SIDETRADE EO 1  vs.  UMWELTBANK

SIDETRADE EO 1

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SIDETRADE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UMWELTBANK

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UMWELTBANK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, UMWELTBANK is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SIDETRADE and UMWELTBANK

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

The idea behind SIDETRADE EO 1 and UMWELTBANK 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.