Correlation Between Aumann AG and Nordex SE

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

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

Diversification Opportunities for Aumann AG and Nordex SE

0.61

Correlation Coefficient

Aumann AG  Nordex SE

Poor diversification

The 3 months correlation between Aumann and Nordex is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aumann AG and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Aumann AG i.e., Aumann AG and Nordex SE go up and down completely randomly.

Pair Corralation between Aumann AG and Nordex SE

Assuming the 90 days horizon Aumann AG is expected to generate 1.91 times less return on investment than Nordex SE. But when comparing it to its historical volatility, Aumann AG is 1.46 times less risky than Nordex SE. It trades about 0.14 of its potential returns per unit of risk. Nordex SE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,160  in Nordex SE on December 29, 2024 and sell it today you would earn a total of  577.00  from holding Nordex SE or generate 49.74% return on investment over 90 days.

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

Aumann AG  vs.  Nordex SE

Aumann AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aumann AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Aumann AG reported solid returns over the last few months and may actually be approaching a breakup point.

Nordex SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nordex SE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nordex SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aumann AG and Nordex SE

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

The idea behind Aumann AG and Nordex 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.