Correlation Between CAIRN HOMES and FlatexDEGIRO

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

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

Diversification Opportunities for CAIRN HOMES and FlatexDEGIRO

0.24

Correlation Coefficient

CAIRN HOMES  FlatexDEGIRO

Modest diversification

The 3 months correlation between CAIRN and FlatexDEGIRO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and flatexDEGIRO AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on flatexDEGIRO AG and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with FlatexDEGIRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of flatexDEGIRO AG has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and FlatexDEGIRO go up and down completely randomly.

Pair Corralation between CAIRN HOMES and FlatexDEGIRO

Assuming the 90 days horizon CAIRN HOMES EO is expected to generate 0.92 times more return on investment than FlatexDEGIRO. However, CAIRN HOMES EO is 1.08 times less risky than FlatexDEGIRO. It trades about 0.09 of its potential returns per unit of risk. flatexDEGIRO AG is currently generating about 0.07 per unit of risk. If you would invest  86.00  in CAIRN HOMES EO on October 27, 2024 and sell it today you would earn a total of  126.00  from holding CAIRN HOMES EO or generate 146.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

CAIRN HOMES EO  vs.  flatexDEGIRO AG

CAIRN HOMES EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAIRN HOMES EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CAIRN HOMES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

flatexDEGIRO AG

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in flatexDEGIRO AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, FlatexDEGIRO unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAIRN HOMES and FlatexDEGIRO

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

The idea behind CAIRN HOMES EO and flatexDEGIRO 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.