Correlation Between Deutsche Lufthansa and TOMI Environmental

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Deutsche Lufthansa and TOMI Environmental 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 Lufthansa and TOMI Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Lufthansa AG and TOMI Environmental Solutions, you can compare the effects of market volatilities on Deutsche Lufthansa and TOMI Environmental 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 Lufthansa with a short position of TOMI Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Lufthansa and TOMI Environmental.

Diversification Opportunities for Deutsche Lufthansa and TOMI Environmental

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Deutsche and TOMI is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Lufthansa AG and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental and Deutsche Lufthansa 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 Lufthansa AG are associated (or correlated) with TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of Deutsche Lufthansa i.e., Deutsche Lufthansa and TOMI Environmental go up and down completely randomly.

Pair Corralation between Deutsche Lufthansa and TOMI Environmental

Assuming the 90 days horizon Deutsche Lufthansa AG is expected to generate 0.89 times more return on investment than TOMI Environmental. However, Deutsche Lufthansa AG is 1.13 times less risky than TOMI Environmental. It trades about 0.22 of its potential returns per unit of risk. TOMI Environmental Solutions is currently generating about -0.12 per unit of risk. If you would invest  645.00  in Deutsche Lufthansa AG on December 2, 2024 and sell it today you would earn a total of  63.00  from holding Deutsche Lufthansa AG or generate 9.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Deutsche Lufthansa AG  vs.  TOMI Environmental Solutions

 Performance 
       Timeline  
Deutsche Lufthansa 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Lufthansa AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Deutsche Lufthansa may actually be approaching a critical reversion point that can send shares even higher in April 2025.
TOMI Environmental 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in TOMI Environmental Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, TOMI Environmental showed solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Lufthansa and TOMI Environmental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Lufthansa and TOMI Environmental

The main advantage of trading using opposite Deutsche Lufthansa and TOMI Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Lufthansa position performs unexpectedly, TOMI Environmental 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 TOMI Environmental will offset losses from the drop in TOMI Environmental's long position.
The idea behind Deutsche Lufthansa AG and TOMI Environmental Solutions 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

Other Complementary Tools

Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Global Correlations
Find global opportunities by holding instruments from different markets