Correlation Between Carl Zeiss and Carl Zeiss

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

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

Diversification Opportunities for Carl Zeiss and Carl Zeiss

0.78

Correlation Coefficient

Carl Zeiss  Carl Zeiss

Poor diversification

The 3 months correlation between Carl and Carl is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Carl Zeiss Meditec and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec and Carl Zeiss 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 Carl Zeiss Meditec are associated (or correlated) with Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of Carl Zeiss i.e., Carl Zeiss and Carl Zeiss go up and down completely randomly.

Pair Corralation between Carl Zeiss and Carl Zeiss

Assuming the 90 days horizon Carl Zeiss Meditec is expected to under-perform the Carl Zeiss. But the pink sheet apears to be less risky and, when comparing its historical volatility, Carl Zeiss Meditec is 1.28 times less risky than Carl Zeiss. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Carl Zeiss Meditec is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  7,000  in Carl Zeiss Meditec on September 3, 2024 and sell it today you would lose (878.00) from holding Carl Zeiss Meditec or give up 12.54% of portfolio value over 90 days.

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

Carl Zeiss Meditec  vs.  Carl Zeiss Meditec

Carl Zeiss Meditec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carl Zeiss Meditec 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Carl Zeiss Meditec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carl Zeiss Meditec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Carl Zeiss and Carl Zeiss

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

The idea behind Carl Zeiss Meditec and Carl Zeiss Meditec 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.