Correlation Between Industrial and Immofinanz

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

By analyzing existing cross correlation between Industrial and Commercial and Immofinanz AG, you can compare the effects of market volatilities on Industrial and Immofinanz 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 Industrial with a short position of Immofinanz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and Immofinanz.

Diversification Opportunities for Industrial and Immofinanz

-0.81

Correlation Coefficient

Industrial  Immofinanz

Pay attention - limited upside

The 3 months correlation between Industrial and Immofinanz is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Immofinanz AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immofinanz AG and Industrial 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 Industrial and Commercial are associated (or correlated) with Immofinanz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immofinanz AG has no effect on the direction of Industrial i.e., Industrial and Immofinanz go up and down completely randomly.

Pair Corralation between Industrial and Immofinanz

Assuming the 90 days horizon Industrial is expected to generate 1.01 times less return on investment than Immofinanz. In addition to that, Industrial is 1.38 times more volatile than Immofinanz AG. It trades about 0.03 of its total potential returns per unit of risk. Immofinanz AG is currently generating about 0.04 per unit of volatility. If you would invest  1,200  in Immofinanz AG on September 3, 2024 and sell it today you would earn a total of  400.00  from holding Immofinanz AG or generate 33.33% return on investment over 90 days.

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

Industrial and Commercial  vs.  Immofinanz AG

Industrial and Commercial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Immofinanz AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immofinanz AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Industrial and Immofinanz

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

The idea behind Industrial and Commercial and Immofinanz 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 Transaction History module to view history of all your transactions and understand their impact on performance.