Correlation Between PNE AG and ALERION CLEANPOWER

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

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

Diversification Opportunities for PNE AG and ALERION CLEANPOWER

-0.6

Correlation Coefficient

PNE AG  ALERION CLEANPOWER

Excellent diversification

The 3 months correlation between PNE and ALERION is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PNE AG and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER and PNE 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 PNE AG are associated (or correlated) with ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of PNE AG i.e., PNE AG and ALERION CLEANPOWER go up and down completely randomly.

Pair Corralation between PNE AG and ALERION CLEANPOWER

Assuming the 90 days trading horizon PNE AG is expected to generate 0.35 times more return on investment than ALERION CLEANPOWER. However, PNE AG is 2.87 times less risky than ALERION CLEANPOWER. It trades about 0.35 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about -0.04 per unit of risk. If you would invest  1,100  in PNE AG on December 30, 2024 and sell it today you would earn a total of  316.00  from holding PNE AG or generate 28.73% return on investment over 90 days.

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

PNE AG  vs.  ALERION CLEANPOWER

PNE AG

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PNE AG are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, PNE AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

ALERION CLEANPOWER

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALERION CLEANPOWER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PNE AG and ALERION CLEANPOWER

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

The idea behind PNE AG and ALERION CLEANPOWER 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.