Correlation Between Rheinmetall and Link Real

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

By analyzing existing cross correlation between Rheinmetall AG and Link Real Estate, you can compare the effects of market volatilities on Rheinmetall and Link Real 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 Rheinmetall with a short position of Link Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Link Real.

Diversification Opportunities for Rheinmetall and Link Real

0.0

Correlation Coefficient

Rheinmetall  Link Real

Pay attention - limited upside

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

Pair Corralation between Rheinmetall and Link Real

If you would invest  289.00  in Link Real Estate on August 31, 2024 and sell it today you would earn a total of  116.00  from holding Link Real Estate or generate 40.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Rheinmetall AG  vs.  Link Real Estate

Rheinmetall AG

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Rheinmetall AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Rheinmetall is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Link Real Estate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Link Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rheinmetall and Link Real

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

The idea behind Rheinmetall AG and Link Real Estate 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.