Correlation Between RATH Aktiengesellscha and CA Immobilien

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

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

Diversification Opportunities for RATH Aktiengesellscha and CA Immobilien

0.82

Correlation Coefficient

RATH Aktiengesellscha  CA Immobilien

Very poor diversification

The 3 months correlation between RATH and CAI is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding RATH Aktiengesellschaft and CA Immobilien Anlagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Immobilien Anlagen and RATH 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 RATH Aktiengesellschaft are associated (or correlated) with CA Immobilien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Immobilien Anlagen has no effect on the direction of RATH Aktiengesellscha i.e., RATH Aktiengesellscha and CA Immobilien go up and down completely randomly.

Pair Corralation between RATH Aktiengesellscha and CA Immobilien

Assuming the 90 days trading horizon RATH Aktiengesellscha is expected to generate 3.28 times less return on investment than CA Immobilien. But when comparing it to its historical volatility, RATH Aktiengesellschaft is 4.32 times less risky than CA Immobilien. It trades about 0.21 of its potential returns per unit of risk. CA Immobilien Anlagen is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,230  in CA Immobilien Anlagen on September 13, 2024 and sell it today you would earn a total of  122.00  from holding CA Immobilien Anlagen or generate 5.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

RATH Aktiengesellschaft  vs.  CA Immobilien Anlagen

RATH Aktiengesellschaft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RATH Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, RATH Aktiengesellscha is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

CA Immobilien Anlagen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CA Immobilien Anlagen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with RATH Aktiengesellscha and CA Immobilien

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

The idea behind RATH Aktiengesellschaft and CA Immobilien Anlagen 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.