Correlation Between COMMERCIAL VEHICLE and Jenoptik

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

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

Diversification Opportunities for COMMERCIAL VEHICLE and Jenoptik

-0.47

Correlation Coefficient

COMMERCIAL VEHICLE  Jenoptik

Very good diversification

The 3 months correlation between COMMERCIAL and Jenoptik is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE and Jenoptik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jenoptik AG and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE are associated (or correlated) with Jenoptik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jenoptik AG has no effect on the direction of COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and Jenoptik go up and down completely randomly.

Pair Corralation between COMMERCIAL VEHICLE and Jenoptik

Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the Jenoptik. In addition to that, COMMERCIAL VEHICLE is 1.52 times more volatile than Jenoptik AG. It trades about -0.2 of its total potential returns per unit of risk. Jenoptik AG is currently generating about 0.0 per unit of volatility. If you would invest  2,252  in Jenoptik AG on December 27, 2024 and sell it today you would lose (40.00) from holding Jenoptik AG or give up 1.78% of portfolio value over 90 days.

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

COMMERCIAL VEHICLE  vs.  Jenoptik AG

COMMERCIAL VEHICLE

Risk-Adjusted Performance

Very Weak

Over the last 90 days COMMERCIAL VEHICLE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Jenoptik AG

Risk-Adjusted Performance

Weak

Over the last 90 days Jenoptik AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Jenoptik is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with COMMERCIAL VEHICLE and Jenoptik

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

The idea behind COMMERCIAL VEHICLE and Jenoptik AG 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.