Correlation Between Geberit AG and DSV Panalpina

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

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

Diversification Opportunities for Geberit AG and DSV Panalpina

-0.01

Correlation Coefficient

Geberit AG  DSV Panalpina

Good diversification

The 3 months correlation between Geberit and DSV is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Geberit AG ADR and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS and Geberit AG 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 Geberit AG ADR are associated (or correlated) with DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of Geberit AG i.e., Geberit AG and DSV Panalpina go up and down completely randomly.

Pair Corralation between Geberit AG and DSV Panalpina

Assuming the 90 days horizon Geberit AG is expected to generate 2.41 times less return on investment than DSV Panalpina. But when comparing it to its historical volatility, Geberit AG ADR is 1.22 times less risky than DSV Panalpina. It trades about 0.04 of its potential returns per unit of risk. DSV Panalpina AS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,657  in DSV Panalpina AS on October 1, 2024 and sell it today you would earn a total of  3,170  from holding DSV Panalpina AS or generate 41.4% return on investment over 90 days.

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

Geberit AG ADR  vs.  DSV Panalpina AS

Geberit AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

DSV Panalpina AS

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, DSV Panalpina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Geberit AG and DSV Panalpina

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

The idea behind Geberit AG ADR and DSV Panalpina AS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.