Correlation Between Aumann AG and Hillenbrand

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

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

Diversification Opportunities for Aumann AG and Hillenbrand

0.27

Correlation Coefficient

Aumann AG  Hillenbrand

Modest diversification

The 3 months correlation between Aumann and Hillenbrand is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aumann AG and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Aumann AG 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 Aumann AG are associated (or correlated) with Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Aumann AG i.e., Aumann AG and Hillenbrand go up and down completely randomly.

Pair Corralation between Aumann AG and Hillenbrand

Assuming the 90 days horizon Aumann AG is expected to under-perform the Hillenbrand. In addition to that, Aumann AG is 1.23 times more volatile than Hillenbrand. It trades about -0.07 of its total potential returns per unit of risk. Hillenbrand is currently generating about -0.02 per unit of volatility. If you would invest  4,572  in Hillenbrand on November 20, 2024 and sell it today you would lose (1,087) from holding Hillenbrand or give up 23.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	49.87%
Values	Daily Returns

Aumann AG  vs.  Hillenbrand

Aumann AG

Risk-Adjusted Performance

Very Weak

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

Hillenbrand

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Hillenbrand may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Aumann AG and Hillenbrand

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

The idea behind Aumann AG and Hillenbrand 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.