Correlation Between Q2M Managementberatu and Deka Deutsche

Can any of the company-specific risk be diversified away by investing in both Q2M Managementberatu and Deka Deutsche 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 Q2M Managementberatu and Deka Deutsche into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Q2M Managementberatung AG and Deka Deutsche Brse, you can compare the effects of market volatilities on Q2M Managementberatu and Deka Deutsche 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 Q2M Managementberatu with a short position of Deka Deutsche. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q2M Managementberatu and Deka Deutsche.

Diversification Opportunities for Q2M Managementberatu and Deka Deutsche

-0.36

Correlation Coefficient

Q2M Managementberatu  Deka Deutsche

Very good diversification

The 3 months correlation between Q2M and Deka is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Q2M Managementberatung AG and Deka Deutsche Brse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deka Deutsche Brse and Q2M Managementberatu 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 Q2M Managementberatung AG are associated (or correlated) with Deka Deutsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deka Deutsche Brse has no effect on the direction of Q2M Managementberatu i.e., Q2M Managementberatu and Deka Deutsche go up and down completely randomly.

Pair Corralation between Q2M Managementberatu and Deka Deutsche

Assuming the 90 days trading horizon Q2M Managementberatung AG is expected to under-perform the Deka Deutsche. In addition to that, Q2M Managementberatu is 23.96 times more volatile than Deka Deutsche Brse. It trades about -0.5 of its total potential returns per unit of risk. Deka Deutsche Brse is currently generating about -0.11 per unit of volatility. If you would invest  7,635  in Deka Deutsche Brse on October 6, 2024 and sell it today you would lose (7.00) from holding Deka Deutsche Brse or give up 0.09% of portfolio value over 90 days.

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

Q2M Managementberatung AG  vs.  Deka Deutsche Brse

Q2M Managementberatung

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Q2M Managementberatung AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Deka Deutsche Brse

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deka Deutsche Brse are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Deka Deutsche is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Q2M Managementberatu and Deka Deutsche

The main advantage of trading using opposite Q2M Managementberatu and Deka Deutsche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q2M Managementberatu position performs unexpectedly, Deka Deutsche 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 Deka Deutsche will offset losses from the drop in Deka Deutsche's long position.

The idea behind Q2M Managementberatung AG and Deka Deutsche Brse 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.