Correlation Between Deutsche Lufthansa and ALTEO Energiaszolgalta

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

By analyzing existing cross correlation between Deutsche Lufthansa AG and ALTEO Energiaszolgaltato Nyrt, you can compare the effects of market volatilities on Deutsche Lufthansa and ALTEO Energiaszolgalta 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 Deutsche Lufthansa with a short position of ALTEO Energiaszolgalta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Lufthansa and ALTEO Energiaszolgalta.

Diversification Opportunities for Deutsche Lufthansa and ALTEO Energiaszolgalta

-0.21

Correlation Coefficient

Deutsche Lufthansa  ALTEO Energiaszolgalta

Very good diversification

The 3 months correlation between Deutsche and ALTEO is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Lufthansa AG and ALTEO Energiaszolgaltato Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTEO Energiaszolgalta and Deutsche Lufthansa 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 Deutsche Lufthansa AG are associated (or correlated) with ALTEO Energiaszolgalta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTEO Energiaszolgalta has no effect on the direction of Deutsche Lufthansa i.e., Deutsche Lufthansa and ALTEO Energiaszolgalta go up and down completely randomly.

Pair Corralation between Deutsche Lufthansa and ALTEO Energiaszolgalta

Assuming the 90 days trading horizon Deutsche Lufthansa is expected to generate 9.57 times less return on investment than ALTEO Energiaszolgalta. In addition to that, Deutsche Lufthansa is 1.22 times more volatile than ALTEO Energiaszolgaltato Nyrt. It trades about 0.03 of its total potential returns per unit of risk. ALTEO Energiaszolgaltato Nyrt is currently generating about 0.37 per unit of volatility. If you would invest  407,000  in ALTEO Energiaszolgaltato Nyrt on December 4, 2024 and sell it today you would earn a total of  197,000  from holding ALTEO Energiaszolgaltato Nyrt or generate 48.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.75%
Values	Daily Returns

Deutsche Lufthansa AG  vs.  ALTEO Energiaszolgaltato Nyrt

Deutsche Lufthansa

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Lufthansa AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Deutsche Lufthansa is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ALTEO Energiaszolgalta

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ALTEO Energiaszolgaltato Nyrt are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, ALTEO Energiaszolgalta sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Lufthansa and ALTEO Energiaszolgalta

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

The idea behind Deutsche Lufthansa AG and ALTEO Energiaszolgaltato Nyrt 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.