Correlation Between Ceconomy and Meso Numismatics

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

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

Diversification Opportunities for Ceconomy and Meso Numismatics

0.2

Correlation Coefficient

Ceconomy  Meso Numismatics

Modest diversification

The 3 months correlation between Ceconomy and Meso is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ceconomy AG ADR and Meso Numismatics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meso Numismatics and Ceconomy 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 Ceconomy AG ADR are associated (or correlated) with Meso Numismatics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meso Numismatics has no effect on the direction of Ceconomy i.e., Ceconomy and Meso Numismatics go up and down completely randomly.

Pair Corralation between Ceconomy and Meso Numismatics

Assuming the 90 days horizon Ceconomy AG ADR is expected to under-perform the Meso Numismatics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ceconomy AG ADR is 3.02 times less risky than Meso Numismatics. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Meso Numismatics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.93  in Meso Numismatics on October 9, 2024 and sell it today you would lose (0.83) from holding Meso Numismatics or give up 28.33% of portfolio value over 90 days.

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

Ceconomy AG ADR  vs.  Meso Numismatics

Ceconomy AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ceconomy AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Meso Numismatics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Meso Numismatics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Meso Numismatics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ceconomy and Meso Numismatics

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

The idea behind Ceconomy AG ADR and Meso Numismatics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.