Correlation Between Superior Plus and Traton SE

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

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

Diversification Opportunities for Superior Plus and Traton SE

-0.22

Correlation Coefficient

Superior Plus  Traton SE

Very good diversification

The 3 months correlation between Superior and Traton is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Traton SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traton SE and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Traton SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traton SE has no effect on the direction of Superior Plus i.e., Superior Plus and Traton SE go up and down completely randomly.

Pair Corralation between Superior Plus and Traton SE

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Traton SE. In addition to that, Superior Plus is 2.06 times more volatile than Traton SE. It trades about -0.04 of its total potential returns per unit of risk. Traton SE is currently generating about -0.01 per unit of volatility. If you would invest  2,910  in Traton SE on September 5, 2024 and sell it today you would lose (40.00) from holding Traton SE or give up 1.37% of portfolio value over 90 days.

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

Superior Plus Corp  vs.  Traton SE

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Traton SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Superior Plus and Traton SE

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

The idea behind Superior Plus Corp and Traton 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.