Correlation Between OSRAM LICHT and VERTIV HOLCL

Can any of the company-specific risk be diversified away by investing in both OSRAM LICHT and VERTIV HOLCL 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 VERTIV HOLCL 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 VERTIV HOLCL A, you can compare the effects of market volatilities on OSRAM LICHT and VERTIV HOLCL 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 VERTIV HOLCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of OSRAM LICHT and VERTIV HOLCL.

Diversification Opportunities for OSRAM LICHT and VERTIV HOLCL

-0.35

Correlation Coefficient

OSRAM LICHT  VERTIV HOLCL

Very good diversification

The 3 months correlation between OSRAM and VERTIV is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding OSRAM LICHT N and VERTIV HOLCL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERTIV HOLCL A 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 VERTIV HOLCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERTIV HOLCL A has no effect on the direction of OSRAM LICHT i.e., OSRAM LICHT and VERTIV HOLCL go up and down completely randomly.

Pair Corralation between OSRAM LICHT and VERTIV HOLCL

Assuming the 90 days trading horizon OSRAM LICHT N is expected to generate 0.04 times more return on investment than VERTIV HOLCL. However, OSRAM LICHT N is 27.67 times less risky than VERTIV HOLCL. It trades about 0.09 of its potential returns per unit of risk. VERTIV HOLCL A is currently generating about -0.1 per unit of risk. If you would invest  5,160  in OSRAM LICHT N on December 29, 2024 and sell it today you would earn a total of  60.00  from holding OSRAM LICHT N or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

OSRAM LICHT N  vs.  VERTIV HOLCL A

OSRAM LICHT N

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OSRAM LICHT N are ranked lower than 6 (%) 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 newest stock price disarray, may contribute to short-term losses for the investors.

VERTIV HOLCL A

Risk-Adjusted Performance

Very Weak

Over the last 90 days VERTIV HOLCL A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with OSRAM LICHT and VERTIV HOLCL

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

The idea behind OSRAM LICHT N and VERTIV HOLCL A 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.