Correlation Between HAMMONIA Schiffsholding and Northern Data

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Can any of the company-specific risk be diversified away by investing in both HAMMONIA Schiffsholding and Northern Data 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 Northern Data 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 Northern Data AG, you can compare the effects of market volatilities on HAMMONIA Schiffsholding and Northern Data 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 Northern Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of HAMMONIA Schiffsholding and Northern Data.

Diversification Opportunities for HAMMONIA Schiffsholding and Northern Data

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between HAMMONIA and Northern is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding HAMMONIA Schiffsholding AG and Northern Data AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Data AG 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 Northern Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Data AG has no effect on the direction of HAMMONIA Schiffsholding i.e., HAMMONIA Schiffsholding and Northern Data go up and down completely randomly.

Pair Corralation between HAMMONIA Schiffsholding and Northern Data

Assuming the 90 days trading horizon HAMMONIA Schiffsholding is expected to generate 12.4 times less return on investment than Northern Data. But when comparing it to its historical volatility, HAMMONIA Schiffsholding AG is 1.95 times less risky than Northern Data. It trades about 0.04 of its potential returns per unit of risk. Northern Data AG is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,645  in Northern Data AG on October 6, 2024 and sell it today you would earn a total of  2,385  from holding Northern Data AG or generate 90.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

HAMMONIA Schiffsholding AG  vs.  Northern Data AG

 Performance 
       Timeline  
HAMMONIA Schiffsholding 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
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.
Northern Data AG 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Northern Data AG are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Northern Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

HAMMONIA Schiffsholding and Northern Data Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HAMMONIA Schiffsholding and Northern Data

The main advantage of trading using opposite HAMMONIA Schiffsholding and Northern Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HAMMONIA Schiffsholding position performs unexpectedly, Northern Data 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 Northern Data will offset losses from the drop in Northern Data's long position.
The idea behind HAMMONIA Schiffsholding AG and Northern Data 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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