Correlation Between Beiersdorf Aktiengesellscha and Gladstone Investment

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

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

Diversification Opportunities for Beiersdorf Aktiengesellscha and Gladstone Investment

-0.2

Correlation Coefficient

Beiersdorf Aktiengesellscha  Gladstone Investment

Good diversification

The 3 months correlation between Beiersdorf and Gladstone is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Beiersdorf Aktiengesellschaft and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Beiersdorf Aktiengesellscha 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 Beiersdorf Aktiengesellschaft are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Beiersdorf Aktiengesellscha i.e., Beiersdorf Aktiengesellscha and Gladstone Investment go up and down completely randomly.

Pair Corralation between Beiersdorf Aktiengesellscha and Gladstone Investment

Assuming the 90 days trading horizon Beiersdorf Aktiengesellschaft is expected to under-perform the Gladstone Investment. But the stock apears to be less risky and, when comparing its historical volatility, Beiersdorf Aktiengesellschaft is 1.85 times less risky than Gladstone Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Gladstone Investment is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,085  in Gladstone Investment on September 2, 2024 and sell it today you would earn a total of  216.00  from holding Gladstone Investment or generate 19.91% return on investment over 90 days.

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

Beiersdorf Aktiengesellschaft  vs.  Gladstone Investment

Beiersdorf Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beiersdorf Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Beiersdorf Aktiengesellscha is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Gladstone Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beiersdorf Aktiengesellscha and Gladstone Investment

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

The idea behind Beiersdorf Aktiengesellschaft and Gladstone Investment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.