Correlation Between Aurubis AG and T-MOBILE

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

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

Diversification Opportunities for Aurubis AG and T-MOBILE

0.76

Correlation Coefficient

Aurubis AG  T-MOBILE

Poor diversification

The 3 months correlation between Aurubis and T-MOBILE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aurubis AG and T MOBILE US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE US and Aurubis AG 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 Aurubis AG are associated (or correlated) with T-MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE US has no effect on the direction of Aurubis AG i.e., Aurubis AG and T-MOBILE go up and down completely randomly.

Pair Corralation between Aurubis AG and T-MOBILE

Assuming the 90 days trading horizon Aurubis AG is expected to under-perform the T-MOBILE. But the stock apears to be less risky and, when comparing its historical volatility, Aurubis AG is 1.63 times less risky than T-MOBILE. The stock trades about -0.58 of its potential returns per unit of risk. The T MOBILE US is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  23,055  in T MOBILE US on October 6, 2024 and sell it today you would lose (1,780) from holding T MOBILE US or give up 7.72% of portfolio value over 90 days.

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

Aurubis AG  vs.  T MOBILE US

Aurubis AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurubis AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aurubis AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

T MOBILE US

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, T-MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurubis AG and T-MOBILE

The main advantage of trading using opposite Aurubis AG and T-MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurubis AG position performs unexpectedly, T-MOBILE 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 T-MOBILE will offset losses from the drop in T-MOBILE's long position.

The idea behind Aurubis AG and T MOBILE US 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.