Correlation Between Brockhaus Capital and TELES Informationstech

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

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

Diversification Opportunities for Brockhaus Capital and TELES Informationstech

-0.04

Correlation Coefficient

Brockhaus Capital  TELES Informationstech

Good diversification

The 3 months correlation between Brockhaus and TELES is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and TELES Informationstechnologien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELES Informationstech and Brockhaus Capital 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 Brockhaus Capital Management are associated (or correlated) with TELES Informationstech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELES Informationstech has no effect on the direction of Brockhaus Capital i.e., Brockhaus Capital and TELES Informationstech go up and down completely randomly.

Pair Corralation between Brockhaus Capital and TELES Informationstech

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the TELES Informationstech. But the stock apears to be less risky and, when comparing its historical volatility, Brockhaus Capital Management is 1.41 times less risky than TELES Informationstech. The stock trades about -0.1 of its potential returns per unit of risk. The TELES Informationstechnologien AG is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  63.00  in TELES Informationstechnologien AG on December 25, 2024 and sell it today you would lose (15.00) from holding TELES Informationstechnologien AG or give up 23.81% of portfolio value over 90 days.

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

Brockhaus Capital Management  vs.  TELES Informationstechnologien

Brockhaus Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TELES Informationstech

Risk-Adjusted Performance

Very Weak

Over the last 90 days TELES Informationstechnologien AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Brockhaus Capital and TELES Informationstech

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

The idea behind Brockhaus Capital Management and TELES Informationstechnologien AG 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.