Correlation Between Roth CH and Carl Zeiss

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

By analyzing existing cross correlation between Roth CH Acquisition and Carl Zeiss Meditec, you can compare the effects of market volatilities on Roth CH and Carl Zeiss 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 Roth CH with a short position of Carl Zeiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roth CH and Carl Zeiss.

Diversification Opportunities for Roth CH and Carl Zeiss

-0.5

Correlation Coefficient

Roth CH  Carl Zeiss

Very good diversification

The 3 months correlation between Roth and Carl is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Roth CH Acquisition and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec and Roth CH 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 Roth CH Acquisition are associated (or correlated) with Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of Roth CH i.e., Roth CH and Carl Zeiss go up and down completely randomly.

Pair Corralation between Roth CH and Carl Zeiss

Given the investment horizon of 90 days Roth CH Acquisition is expected to generate 0.52 times more return on investment than Carl Zeiss. However, Roth CH Acquisition is 1.92 times less risky than Carl Zeiss. It trades about -0.01 of its potential returns per unit of risk. Carl Zeiss Meditec is currently generating about -0.2 per unit of risk. If you would invest  1,124  in Roth CH Acquisition on September 4, 2024 and sell it today you would lose (9.00) from holding Roth CH Acquisition or give up 0.8% of portfolio value over 90 days.

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

Roth CH Acquisition  vs.  Carl Zeiss Meditec

Roth CH Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roth CH Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Roth CH is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Carl Zeiss Meditec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carl Zeiss Meditec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Roth CH and Carl Zeiss

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

The idea behind Roth CH Acquisition and Carl Zeiss Meditec 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.