Correlation Between Sixt SE and Indus Gas

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

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

Diversification Opportunities for Sixt SE and Indus Gas

-0.39

Correlation Coefficient

Sixt SE  Indus Gas

Very good diversification

The 3 months correlation between Sixt and Indus is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sixt SE and Indus Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indus Gas and Sixt SE 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 Sixt SE are associated (or correlated) with Indus Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indus Gas has no effect on the direction of Sixt SE i.e., Sixt SE and Indus Gas go up and down completely randomly.

Pair Corralation between Sixt SE and Indus Gas

Assuming the 90 days trading horizon Sixt SE is expected to generate 75.83 times less return on investment than Indus Gas. But when comparing it to its historical volatility, Sixt SE is 30.8 times less risky than Indus Gas. It trades about 0.09 of its potential returns per unit of risk. Indus Gas is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Indus Gas on September 2, 2024 and sell it today you would earn a total of  3.20  from holding Indus Gas or generate 128.0% return on investment over 90 days.

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

Sixt SE  vs.  Indus Gas

Sixt SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sixt SE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Indus Gas

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Indus Gas are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Indus Gas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sixt SE and Indus Gas

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

The idea behind Sixt SE and Indus Gas 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.