Correlation Between DAX Index and Tsumura

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

By analyzing existing cross correlation between DAX Index and Tsumura Co, you can compare the effects of market volatilities on DAX Index and Tsumura 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 Tsumura. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Tsumura.

Diversification Opportunities for DAX Index and Tsumura

0.0

Correlation Coefficient

DAX Index  Tsumura

Pay attention - limited upside

The 3 months correlation between DAX and Tsumura is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Tsumura Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsumura 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 Tsumura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsumura has no effect on the direction of DAX Index i.e., DAX Index and Tsumura go up and down completely randomly.

Pair Corralation between DAX Index and Tsumura

If you would invest  1,940,520  in DAX Index on September 24, 2024 and sell it today you would earn a total of  47,955  from holding DAX Index or generate 2.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

DAX Index  vs.  Tsumura Co

Pair Trading with DAX Index and Tsumura

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

The idea behind DAX Index and Tsumura Co 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 Stocks Directory module to find actively traded stocks across global markets.