Correlation Between Deutsche Health and Cahxx

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

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

Diversification Opportunities for Deutsche Health and Cahxx

0.52

Correlation Coefficient

Deutsche Health  Cahxx

Very weak diversification

The 3 months correlation between Deutsche and Cahxx is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Health And and Cahxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cahxx and Deutsche Health 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 Deutsche Health And are associated (or correlated) with Cahxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cahxx has no effect on the direction of Deutsche Health i.e., Deutsche Health and Cahxx go up and down completely randomly.

Pair Corralation between Deutsche Health and Cahxx

Assuming the 90 days horizon Deutsche Health And is expected to under-perform the Cahxx. But the mutual fund apears to be less risky and, when comparing its historical volatility, Deutsche Health And is 86.53 times less risky than Cahxx. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Cahxx is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  491.00  in Cahxx on September 30, 2024 and sell it today you would lose (391.00) from holding Cahxx or give up 79.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Deutsche Health And  vs.  Cahxx

Deutsche Health And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Health And has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Cahxx

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cahxx are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cahxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Health and Cahxx

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

The idea behind Deutsche Health And and Cahxx 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.