Correlation Between PARKEN Sport and UMWELTBANK

Can any of the company-specific risk be diversified away by investing in both PARKEN Sport and UMWELTBANK 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 UMWELTBANK 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 UMWELTBANK, you can compare the effects of market volatilities on PARKEN Sport and UMWELTBANK 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 UMWELTBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and UMWELTBANK.

Diversification Opportunities for PARKEN Sport and UMWELTBANK

0.65

Correlation Coefficient

PARKEN Sport  UMWELTBANK

Poor diversification

The 3 months correlation between PARKEN and UMWELTBANK is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and UMWELTBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMWELTBANK 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 UMWELTBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMWELTBANK has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and UMWELTBANK go up and down completely randomly.

Pair Corralation between PARKEN Sport and UMWELTBANK

Assuming the 90 days horizon PARKEN Sport is expected to generate 1.64 times less return on investment than UMWELTBANK. In addition to that, PARKEN Sport is 1.2 times more volatile than UMWELTBANK. It trades about 0.08 of its total potential returns per unit of risk. UMWELTBANK is currently generating about 0.15 per unit of volatility. If you would invest  498.00  in UMWELTBANK on September 27, 2024 and sell it today you would earn a total of  106.00  from holding UMWELTBANK or generate 21.29% return on investment over 90 days.

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

PARKEN Sport Entertainment  vs.  UMWELTBANK

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.

UMWELTBANK

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UMWELTBANK are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking signals, UMWELTBANK exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PARKEN Sport and UMWELTBANK

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

The idea behind PARKEN Sport Entertainment and UMWELTBANK 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.