Correlation Between Mhlbauer Holding and ELECOM CO

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

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

Diversification Opportunities for Mhlbauer Holding and ELECOM CO

0.13

Correlation Coefficient

Mhlbauer Holding  ELECOM CO

Average diversification

The 3 months correlation between Mhlbauer and ELECOM is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mhlbauer Holding AG and ELECOM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECOM LTD and Mhlbauer Holding 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 Mhlbauer Holding AG are associated (or correlated) with ELECOM CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECOM LTD has no effect on the direction of Mhlbauer Holding i.e., Mhlbauer Holding and ELECOM CO go up and down completely randomly.

Pair Corralation between Mhlbauer Holding and ELECOM CO

Assuming the 90 days trading horizon Mhlbauer Holding AG is expected to under-perform the ELECOM CO. In addition to that, Mhlbauer Holding is 1.52 times more volatile than ELECOM LTD. It trades about -0.09 of its total potential returns per unit of risk. ELECOM LTD is currently generating about 0.12 per unit of volatility. If you would invest  840.00  in ELECOM LTD on September 27, 2024 and sell it today you would earn a total of  45.00  from holding ELECOM LTD or generate 5.36% return on investment over 90 days.

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

Mhlbauer Holding AG  vs.  ELECOM LTD

Mhlbauer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mhlbauer Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ELECOM LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ELECOM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ELECOM CO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mhlbauer Holding and ELECOM CO

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

The idea behind Mhlbauer Holding AG and ELECOM LTD 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..