Correlation Between MAHLE Metal and Palantir Technologies

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

By analyzing existing cross correlation between MAHLE Metal Leve and Palantir Technologies, you can compare the effects of market volatilities on MAHLE Metal and Palantir Technologies 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 MAHLE Metal with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Palantir Technologies.

Diversification Opportunities for MAHLE Metal and Palantir Technologies

0.15

Correlation Coefficient

MAHLE Metal  Palantir Technologies

Average diversification

The 3 months correlation between MAHLE and Palantir is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and MAHLE Metal 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 MAHLE Metal Leve are associated (or correlated) with Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Palantir Technologies go up and down completely randomly.

Pair Corralation between MAHLE Metal and Palantir Technologies

Assuming the 90 days trading horizon MAHLE Metal is expected to generate 2.61 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, MAHLE Metal Leve is 3.41 times less risky than Palantir Technologies. It trades about 0.04 of its potential returns per unit of risk. Palantir Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16,047  in Palantir Technologies on December 29, 2024 and sell it today you would earn a total of  255.00  from holding Palantir Technologies or generate 1.59% return on investment over 90 days.

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

MAHLE Metal Leve  vs.  Palantir Technologies

MAHLE Metal Leve

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MAHLE Metal Leve are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MAHLE Metal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Palantir Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Palantir Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MAHLE Metal and Palantir Technologies

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

The idea behind MAHLE Metal Leve and Palantir Technologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.