Correlation Between OSRAM LICHT and PPHE HOTEL

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Can any of the company-specific risk be diversified away by investing in both OSRAM LICHT and PPHE HOTEL 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 OSRAM LICHT and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OSRAM LICHT N and PPHE HOTEL GROUP, you can compare the effects of market volatilities on OSRAM LICHT and PPHE HOTEL 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 OSRAM LICHT with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of OSRAM LICHT and PPHE HOTEL.

Diversification Opportunities for OSRAM LICHT and PPHE HOTEL

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between OSRAM and PPHE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding OSRAM LICHT N and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and OSRAM LICHT 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 OSRAM LICHT N are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of OSRAM LICHT i.e., OSRAM LICHT and PPHE HOTEL go up and down completely randomly.

Pair Corralation between OSRAM LICHT and PPHE HOTEL

Assuming the 90 days trading horizon OSRAM LICHT is expected to generate 9.56 times less return on investment than PPHE HOTEL. But when comparing it to its historical volatility, OSRAM LICHT N is 6.43 times less risky than PPHE HOTEL. It trades about 0.15 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,410  in PPHE HOTEL GROUP on September 26, 2024 and sell it today you would earn a total of  220.00  from holding PPHE HOTEL GROUP or generate 15.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

OSRAM LICHT N  vs.  PPHE HOTEL GROUP

 Performance 
       Timeline  
OSRAM LICHT N 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in OSRAM LICHT N are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, OSRAM LICHT is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
PPHE HOTEL GROUP 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PPHE HOTEL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

OSRAM LICHT and PPHE HOTEL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OSRAM LICHT and PPHE HOTEL

The main advantage of trading using opposite OSRAM LICHT and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OSRAM LICHT position performs unexpectedly, PPHE HOTEL 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.
The idea behind OSRAM LICHT N and PPHE HOTEL GROUP 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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