Correlation Between PICKN PAY and Deutsche Wohnen

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

By analyzing existing cross correlation between PICKN PAY STORES and Deutsche Wohnen SE, you can compare the effects of market volatilities on PICKN PAY and Deutsche Wohnen 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 PICKN PAY with a short position of Deutsche Wohnen. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and Deutsche Wohnen.

Diversification Opportunities for PICKN PAY and Deutsche Wohnen

0.08

Correlation Coefficient

PICKN PAY  Deutsche Wohnen

Significant diversification

The 3 months correlation between PICKN and Deutsche is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and Deutsche Wohnen SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Wohnen SE and PICKN PAY 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 PICKN PAY STORES are associated (or correlated) with Deutsche Wohnen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Wohnen SE has no effect on the direction of PICKN PAY i.e., PICKN PAY and Deutsche Wohnen go up and down completely randomly.

Pair Corralation between PICKN PAY and Deutsche Wohnen

Assuming the 90 days trading horizon PICKN PAY STORES is expected to under-perform the Deutsche Wohnen. In addition to that, PICKN PAY is 1.55 times more volatile than Deutsche Wohnen SE. It trades about -0.03 of its total potential returns per unit of risk. Deutsche Wohnen SE is currently generating about 0.01 per unit of volatility. If you would invest  2,206  in Deutsche Wohnen SE on October 11, 2024 and sell it today you would earn a total of  94.00  from holding Deutsche Wohnen SE or generate 4.26% return on investment over 90 days.

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

PICKN PAY STORES  vs.  Deutsche Wohnen SE

PICKN PAY STORES

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICKN PAY STORES are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PICKN PAY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Deutsche Wohnen SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PICKN PAY and Deutsche Wohnen

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

The idea behind PICKN PAY STORES and Deutsche Wohnen SE 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.