Correlation Between DAX Index and Coor Service

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

By analyzing existing cross correlation between DAX Index and Coor Service Management, you can compare the effects of market volatilities on DAX Index and Coor Service 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 DAX Index with a short position of Coor Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Coor Service.

Diversification Opportunities for DAX Index and Coor Service

0.21

Correlation Coefficient

DAX Index  Coor Service

Modest diversification

The 3 months correlation between DAX and Coor is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Coor Service Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coor Service Management and DAX Index 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 DAX Index are associated (or correlated) with Coor Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coor Service Management has no effect on the direction of DAX Index i.e., DAX Index and Coor Service go up and down completely randomly.

Pair Corralation between DAX Index and Coor Service

Assuming the 90 days trading horizon DAX Index is expected to generate 1.19 times less return on investment than Coor Service. But when comparing it to its historical volatility, DAX Index is 3.0 times less risky than Coor Service. It trades about 0.17 of its potential returns per unit of risk. Coor Service Management is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  292.00  in Coor Service Management on December 29, 2024 and sell it today you would earn a total of  34.00  from holding Coor Service Management or generate 11.64% return on investment over 90 days.

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

DAX Index  vs.  Coor Service Management

Pair Trading with DAX Index and Coor Service

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

The idea behind DAX Index and Coor Service Management 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.