Correlation Between Comet Holding and Komax Holding

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

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

Diversification Opportunities for Comet Holding and Komax Holding

0.69

Correlation Coefficient

Comet Holding  Komax Holding

Poor diversification

The 3 months correlation between Comet and Komax is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Comet Holding AG and Komax Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komax Holding AG and Comet Holding 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 Comet Holding AG are associated (or correlated) with Komax Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komax Holding AG has no effect on the direction of Comet Holding i.e., Comet Holding and Komax Holding go up and down completely randomly.

Pair Corralation between Comet Holding and Komax Holding

Assuming the 90 days trading horizon Comet Holding AG is expected to generate 0.81 times more return on investment than Komax Holding. However, Comet Holding AG is 1.24 times less risky than Komax Holding. It trades about -0.03 of its potential returns per unit of risk. Komax Holding AG is currently generating about -0.03 per unit of risk. If you would invest  24,850  in Comet Holding AG on December 30, 2024 and sell it today you would lose (1,950) from holding Comet Holding AG or give up 7.85% of portfolio value over 90 days.

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

Comet Holding AG  vs.  Komax Holding AG

Comet Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comet Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Comet Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Komax Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Komax Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Comet Holding and Komax Holding

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

The idea behind Comet Holding AG and Komax Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.