Correlation Between Deutsche Boerse and ASX Limited

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

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

Diversification Opportunities for Deutsche Boerse and ASX Limited

-0.25

Correlation Coefficient

Deutsche Boerse  ASX Limited

Very good diversification

The 3 months correlation between Deutsche and ASX is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Boerse AG and ASX Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASX Limited ADR and Deutsche Boerse 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 Deutsche Boerse AG are associated (or correlated) with ASX Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASX Limited ADR has no effect on the direction of Deutsche Boerse i.e., Deutsche Boerse and ASX Limited go up and down completely randomly.

Pair Corralation between Deutsche Boerse and ASX Limited

Assuming the 90 days horizon Deutsche Boerse AG is expected to generate 0.81 times more return on investment than ASX Limited. However, Deutsche Boerse AG is 1.24 times less risky than ASX Limited. It trades about 0.08 of its potential returns per unit of risk. ASX Limited ADR is currently generating about -0.1 per unit of risk. If you would invest  2,328  in Deutsche Boerse AG on October 24, 2024 and sell it today you would earn a total of  118.00  from holding Deutsche Boerse AG or generate 5.07% return on investment over 90 days.

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

Deutsche Boerse AG  vs.  ASX Limited ADR

Deutsche Boerse AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Boerse AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Deutsche Boerse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ASX Limited ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASX Limited ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Deutsche Boerse and ASX Limited

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

The idea behind Deutsche Boerse AG and ASX Limited ADR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.