Correlation Between ÜSTRA Hannoversche and COFCO Joycome

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

By analyzing existing cross correlation between STRA Hannoversche Verkehrsbetriebe and COFCO Joycome Foods, you can compare the effects of market volatilities on ÜSTRA Hannoversche and COFCO Joycome 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 ÜSTRA Hannoversche with a short position of COFCO Joycome. Check out your portfolio center. Please also check ongoing floating volatility patterns of ÜSTRA Hannoversche and COFCO Joycome.

Diversification Opportunities for ÜSTRA Hannoversche and COFCO Joycome

0.24

Correlation Coefficient

ÜSTRA Hannoversche  COFCO Joycome

Modest diversification

The 3 months correlation between ÜSTRA and COFCO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding STRA Hannoversche Verkehrsbetr and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods and ÜSTRA Hannoversche 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 STRA Hannoversche Verkehrsbetriebe are associated (or correlated) with COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of ÜSTRA Hannoversche i.e., ÜSTRA Hannoversche and COFCO Joycome go up and down completely randomly.

Pair Corralation between ÜSTRA Hannoversche and COFCO Joycome

Assuming the 90 days horizon ÜSTRA Hannoversche is expected to generate 1.44 times less return on investment than COFCO Joycome. But when comparing it to its historical volatility, STRA Hannoversche Verkehrsbetriebe is 1.19 times less risky than COFCO Joycome. It trades about 0.01 of its potential returns per unit of risk. COFCO Joycome Foods is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  17.00  in COFCO Joycome Foods on December 25, 2024 and sell it today you would earn a total of  0.00  from holding COFCO Joycome Foods or generate 0.0% return on investment over 90 days.

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

STRA Hannoversche Verkehrsbetr  vs.  COFCO Joycome Foods

ÜSTRA Hannoversche

Risk-Adjusted Performance

Very Weak

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

COFCO Joycome Foods

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ÜSTRA Hannoversche and COFCO Joycome

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

The idea behind STRA Hannoversche Verkehrsbetriebe and COFCO Joycome Foods 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.