Correlation Between PARKEN Sport and Deutsche Wohnen

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

By analyzing existing cross correlation between PARKEN Sport Entertainment and Deutsche Wohnen SE, you can compare the effects of market volatilities on PARKEN Sport and Deutsche Wohnen 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 PARKEN Sport with a short position of Deutsche Wohnen. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and Deutsche Wohnen.

Diversification Opportunities for PARKEN Sport and Deutsche Wohnen

-0.43

Correlation Coefficient

PARKEN Sport  Deutsche Wohnen

Very good diversification

The 3 months correlation between PARKEN and Deutsche is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Deutsche Wohnen SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Wohnen SE and PARKEN Sport 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 PARKEN Sport Entertainment are associated (or correlated) with Deutsche Wohnen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Wohnen SE has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and Deutsche Wohnen go up and down completely randomly.

Pair Corralation between PARKEN Sport and Deutsche Wohnen

Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 1.28 times more return on investment than Deutsche Wohnen. However, PARKEN Sport is 1.28 times more volatile than Deutsche Wohnen SE. It trades about 0.11 of its potential returns per unit of risk. Deutsche Wohnen SE is currently generating about -0.14 per unit of risk. If you would invest  1,605  in PARKEN Sport Entertainment on September 29, 2024 and sell it today you would earn a total of  80.00  from holding PARKEN Sport Entertainment or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

PARKEN Sport Entertainment  vs.  Deutsche Wohnen SE

PARKEN Sport Enterta

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PARKEN Sport reported solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Wohnen SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Wohnen SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Deutsche Wohnen is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PARKEN Sport and Deutsche Wohnen

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

The idea behind PARKEN Sport Entertainment and Deutsche Wohnen SE 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.