Correlation Between ÜSTRA Hannoversche and VeriSign

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

Diversification Opportunities for ÜSTRA Hannoversche and VeriSign

0.23

Correlation Coefficient

ÜSTRA Hannoversche  VeriSign

Modest diversification

The 3 months correlation between ÜSTRA and VeriSign is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding STRA Hannoversche Verkehrsbetr and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign 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 VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of ÜSTRA Hannoversche i.e., ÜSTRA Hannoversche and VeriSign go up and down completely randomly.

Pair Corralation between ÜSTRA Hannoversche and VeriSign

Assuming the 90 days horizon STRA Hannoversche Verkehrsbetriebe is expected to under-perform the VeriSign. In addition to that, ÜSTRA Hannoversche is 1.07 times more volatile than VeriSign. It trades about -0.02 of its total potential returns per unit of risk. VeriSign is currently generating about 0.09 per unit of volatility. If you would invest  20,780  in VeriSign on December 29, 2024 and sell it today you would earn a total of  2,030  from holding VeriSign or generate 9.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

STRA Hannoversche Verkehrsbetr  vs.  VeriSign

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

VeriSign

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VeriSign are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VeriSign may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ÜSTRA Hannoversche and VeriSign

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

The idea behind STRA Hannoversche Verkehrsbetriebe and VeriSign 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.