Correlation Between Retail Estates and Mhlbauer Holding

Can any of the company-specific risk be diversified away by investing in both Retail Estates and Mhlbauer Holding 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 Retail Estates and Mhlbauer Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Retail Estates and Mhlbauer Holding

0.53

Correlation Coefficient

Retail Estates  Mhlbauer Holding

Very weak diversification

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

Pair Corralation between Retail Estates and Mhlbauer Holding

Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Mhlbauer Holding. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 1.68 times less risky than Mhlbauer Holding. The stock trades about -0.18 of its potential returns per unit of risk. The Mhlbauer Holding AG is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,220  in Mhlbauer Holding AG on October 27, 2024 and sell it today you would earn a total of  100.00  from holding Mhlbauer Holding AG or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Retail Estates NV  vs.  Mhlbauer Holding AG

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV 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.

Mhlbauer Holding

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mhlbauer Holding AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Mhlbauer Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Retail Estates and Mhlbauer Holding

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

The idea behind Retail Estates NV and Mhlbauer Holding AG 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.