Correlation Between STRA Hannoversche and CSX

Can any of the company-specific risk be diversified away by investing in both STRA Hannoversche and CSX 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 STRA Hannoversche and CSX 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 CSX Corporation, you can compare the effects of market volatilities on STRA Hannoversche and CSX 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 STRA Hannoversche with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRA Hannoversche and CSX.

Diversification Opportunities for STRA Hannoversche and CSX

-0.65

Correlation Coefficient

STRA Hannoversche  CSX

Excellent diversification

The 3 months correlation between STRA and CSX is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding STRA Hannoversche Verkehrsbetr and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and STRA 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of STRA Hannoversche i.e., STRA Hannoversche and CSX go up and down completely randomly.

Pair Corralation between STRA Hannoversche and CSX

Assuming the 90 days horizon STRA Hannoversche Verkehrsbetriebe is expected to under-perform the CSX. In addition to that, STRA Hannoversche is 1.75 times more volatile than CSX Corporation. It trades about -0.04 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.04 per unit of volatility. If you would invest  3,061  in CSX Corporation on September 17, 2024 and sell it today you would earn a total of  134.00  from holding CSX Corporation or generate 4.38% return on investment over 90 days.

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

STRA Hannoversche Verkehrsbetr  vs.  CSX Corp.

STRA Hannoversche

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CSX Corporation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CSX is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with STRA Hannoversche and CSX

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

The idea behind STRA Hannoversche Verkehrsbetriebe and CSX Corporation 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.