Correlation Between Hongkong and DEUTSCHE WOHNEN

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

By analyzing existing cross correlation between The Hongkong and and DEUTSCHE WOHNEN ADRS12, you can compare the effects of market volatilities on Hongkong and DEUTSCHE WOHNEN 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 Hongkong with a short position of DEUTSCHE WOHNEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongkong and DEUTSCHE WOHNEN.

Diversification Opportunities for Hongkong and DEUTSCHE WOHNEN

0.08

Correlation Coefficient

Hongkong  DEUTSCHE WOHNEN

Significant diversification

The 3 months correlation between Hongkong and DEUTSCHE is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Hongkong and and DEUTSCHE WOHNEN ADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE WOHNEN ADRS12 and Hongkong 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 The Hongkong and are associated (or correlated) with DEUTSCHE WOHNEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE WOHNEN ADRS12 has no effect on the direction of Hongkong i.e., Hongkong and DEUTSCHE WOHNEN go up and down completely randomly.

Pair Corralation between Hongkong and DEUTSCHE WOHNEN

Assuming the 90 days horizon The Hongkong and is expected to under-perform the DEUTSCHE WOHNEN. But the stock apears to be less risky and, when comparing its historical volatility, The Hongkong and is 2.5 times less risky than DEUTSCHE WOHNEN. The stock trades about -0.08 of its potential returns per unit of risk. The DEUTSCHE WOHNEN ADRS12 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,110  in DEUTSCHE WOHNEN ADRS12 on October 26, 2024 and sell it today you would earn a total of  0.00  from holding DEUTSCHE WOHNEN ADRS12 or generate 0.0% return on investment over 90 days.

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

The Hongkong and  vs.  DEUTSCHE WOHNEN ADRS12

The Hongkong

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hongkong and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hongkong reported solid returns over the last few months and may actually be approaching a breakup point.

DEUTSCHE WOHNEN ADRS12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE WOHNEN ADRS12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DEUTSCHE WOHNEN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hongkong and DEUTSCHE WOHNEN

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

The idea behind The Hongkong and and DEUTSCHE WOHNEN ADRS12 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.