Correlation Between RATIONAL Aktiengesellscha and Flowserve

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

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

Diversification Opportunities for RATIONAL Aktiengesellscha and Flowserve

0.0

Correlation Coefficient

RATIONAL Aktiengesellscha  Flowserve

Pay attention - limited upside

The 3 months correlation between RATIONAL and Flowserve is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RATIONAL Aktiengesellschaft and Flowserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowserve 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 Flowserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowserve has no effect on the direction of RATIONAL Aktiengesellscha i.e., RATIONAL Aktiengesellscha and Flowserve go up and down completely randomly.

Pair Corralation between RATIONAL Aktiengesellscha and Flowserve

Assuming the 90 days horizon RATIONAL Aktiengesellscha is expected to generate 1.88 times less return on investment than Flowserve. In addition to that, RATIONAL Aktiengesellscha is 1.03 times more volatile than Flowserve. It trades about 0.05 of its total potential returns per unit of risk. Flowserve is currently generating about 0.09 per unit of volatility. If you would invest  2,946  in Flowserve on September 25, 2024 and sell it today you would earn a total of  2,874  from holding Flowserve or generate 97.57% return on investment over 90 days.

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

RATIONAL Aktiengesellschaft  vs.  Flowserve

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 fairly strong forward indicators, RATIONAL Aktiengesellscha is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Flowserve

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flowserve are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Flowserve may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RATIONAL Aktiengesellscha and Flowserve

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

The idea behind RATIONAL Aktiengesellschaft and Flowserve 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..