Correlation Between Daimler Truck and Hays Plc

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

By analyzing existing cross correlation between Daimler Truck Holding and Hays plc, you can compare the effects of market volatilities on Daimler Truck and Hays Plc 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 Daimler Truck with a short position of Hays Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daimler Truck and Hays Plc.

Diversification Opportunities for Daimler Truck and Hays Plc

-0.71

Correlation Coefficient

Daimler Truck  Hays Plc

Pay attention - limited upside

The 3 months correlation between Daimler and Hays is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Daimler Truck Holding and Hays plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hays plc and Daimler Truck 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 Daimler Truck Holding are associated (or correlated) with Hays Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hays plc has no effect on the direction of Daimler Truck i.e., Daimler Truck and Hays Plc go up and down completely randomly.

Pair Corralation between Daimler Truck and Hays Plc

Assuming the 90 days trading horizon Daimler Truck Holding is expected to generate 0.72 times more return on investment than Hays Plc. However, Daimler Truck Holding is 1.39 times less risky than Hays Plc. It trades about 0.1 of its potential returns per unit of risk. Hays plc is currently generating about -0.06 per unit of risk. If you would invest  3,791  in Daimler Truck Holding on December 5, 2024 and sell it today you would earn a total of  296.00  from holding Daimler Truck Holding or generate 7.81% return on investment over 90 days.

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

Daimler Truck Holding  vs.  Hays plc

Daimler Truck Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daimler Truck Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Daimler Truck may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hays plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hays plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Daimler Truck and Hays Plc

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

The idea behind Daimler Truck Holding and Hays plc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.