Correlation Between RATIONAL Aktiengesellscha and Broadwind

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

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

Diversification Opportunities for RATIONAL Aktiengesellscha and Broadwind

0.55

Correlation Coefficient

RATIONAL Aktiengesellscha  Broadwind

Very weak diversification

The 3 months correlation between RATIONAL and Broadwind is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding RATIONAL Aktiengesellschaft and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellschaft are associated (or correlated) with Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of RATIONAL Aktiengesellscha i.e., RATIONAL Aktiengesellscha and Broadwind go up and down completely randomly.

Pair Corralation between RATIONAL Aktiengesellscha and Broadwind

Assuming the 90 days trading horizon RATIONAL Aktiengesellschaft is expected to generate 0.38 times more return on investment than Broadwind. However, RATIONAL Aktiengesellschaft is 2.65 times less risky than Broadwind. It trades about 0.06 of its potential returns per unit of risk. Broadwind is currently generating about -0.02 per unit of risk. If you would invest  68,257  in RATIONAL Aktiengesellschaft on September 20, 2024 and sell it today you would earn a total of  16,293  from holding RATIONAL Aktiengesellschaft or generate 23.87% return on investment over 90 days.

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

RATIONAL Aktiengesellschaft  vs.  Broadwind

RATIONAL Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RATIONAL Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RATIONAL Aktiengesellscha is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Broadwind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadwind has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 RATIONAL Aktiengesellscha and Broadwind

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

The idea behind RATIONAL Aktiengesellschaft and Broadwind 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.