Correlation Between SCHMID Group and ChargePoint Holdings

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

By analyzing existing cross correlation between SCHMID Group NV and ChargePoint Holdings, you can compare the effects of market volatilities on SCHMID Group and ChargePoint Holdings 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 SCHMID Group with a short position of ChargePoint Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCHMID Group and ChargePoint Holdings.

Diversification Opportunities for SCHMID Group and ChargePoint Holdings

0.01

Correlation Coefficient

SCHMID Group  ChargePoint Holdings

Significant diversification

The 3 months correlation between SCHMID and ChargePoint is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SCHMID Group NV and ChargePoint Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChargePoint Holdings and SCHMID Group 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 SCHMID Group NV are associated (or correlated) with ChargePoint Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChargePoint Holdings has no effect on the direction of SCHMID Group i.e., SCHMID Group and ChargePoint Holdings go up and down completely randomly.

Pair Corralation between SCHMID Group and ChargePoint Holdings

Assuming the 90 days horizon SCHMID Group NV is expected to under-perform the ChargePoint Holdings. In addition to that, SCHMID Group is 1.59 times more volatile than ChargePoint Holdings. It trades about -0.19 of its total potential returns per unit of risk. ChargePoint Holdings is currently generating about -0.09 per unit of volatility. If you would invest  113.00  in ChargePoint Holdings on October 15, 2024 and sell it today you would lose (11.00) from holding ChargePoint Holdings or give up 9.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

SCHMID Group NV  vs.  ChargePoint Holdings

SCHMID Group NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCHMID Group NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, SCHMID Group showed solid returns over the last few months and may actually be approaching a breakup point.

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SCHMID Group and ChargePoint Holdings

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

The idea behind SCHMID Group NV and ChargePoint Holdings 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.