Correlation Between Ambase Corp and Vonovia SE

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

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

Diversification Opportunities for Ambase Corp and Vonovia SE

0.87

Correlation Coefficient

Ambase Corp  Vonovia SE

Very poor diversification

The 3 months correlation between Ambase and Vonovia is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ambase Corp and Vonovia SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE ADR and Ambase Corp 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 Ambase Corp are associated (or correlated) with Vonovia SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vonovia SE ADR has no effect on the direction of Ambase Corp i.e., Ambase Corp and Vonovia SE go up and down completely randomly.

Pair Corralation between Ambase Corp and Vonovia SE

Given the investment horizon of 90 days Ambase Corp is expected to under-perform the Vonovia SE. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ambase Corp is 1.06 times less risky than Vonovia SE. The pink sheet trades about -0.38 of its potential returns per unit of risk. The Vonovia SE ADR is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,591  in Vonovia SE ADR on September 26, 2024 and sell it today you would lose (47.00) from holding Vonovia SE ADR or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Ambase Corp  vs.  Vonovia SE ADR

Ambase Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambase Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Vonovia SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vonovia SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ambase Corp and Vonovia SE

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

The idea behind Ambase Corp and Vonovia SE ADR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.