Correlation Between HAMMONIA Schiffsholding and Genertec Universal

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

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

Diversification Opportunities for HAMMONIA Schiffsholding and Genertec Universal

-0.46

Correlation Coefficient

HAMMONIA Schiffsholding  Genertec Universal

Very good diversification

The 3 months correlation between HAMMONIA and Genertec is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding HAMMONIA Schiffsholding AG and Genertec Universal Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genertec Universal and HAMMONIA Schiffsholding 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 HAMMONIA Schiffsholding AG are associated (or correlated) with Genertec Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genertec Universal has no effect on the direction of HAMMONIA Schiffsholding i.e., HAMMONIA Schiffsholding and Genertec Universal go up and down completely randomly.

Pair Corralation between HAMMONIA Schiffsholding and Genertec Universal

Assuming the 90 days trading horizon HAMMONIA Schiffsholding AG is expected to generate 0.66 times more return on investment than Genertec Universal. However, HAMMONIA Schiffsholding AG is 1.52 times less risky than Genertec Universal. It trades about 0.04 of its potential returns per unit of risk. Genertec Universal Medical is currently generating about -0.01 per unit of risk. If you would invest  28,600  in HAMMONIA Schiffsholding AG on October 6, 2024 and sell it today you would earn a total of  1,200  from holding HAMMONIA Schiffsholding AG or generate 4.2% return on investment over 90 days.

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

HAMMONIA Schiffsholding AG  vs.  Genertec Universal Medical

HAMMONIA Schiffsholding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HAMMONIA Schiffsholding AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, HAMMONIA Schiffsholding is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Genertec Universal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genertec Universal Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genertec Universal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HAMMONIA Schiffsholding and Genertec Universal

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

The idea behind HAMMONIA Schiffsholding AG and Genertec Universal Medical 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.