Correlation Between SCHALTBAU HOLDING and REVO INSURANCE

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

By analyzing existing cross correlation between SCHALTBAU HOLDING and REVO INSURANCE SPA, you can compare the effects of market volatilities on SCHALTBAU HOLDING and REVO INSURANCE 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 SCHALTBAU HOLDING with a short position of REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCHALTBAU HOLDING and REVO INSURANCE.

Diversification Opportunities for SCHALTBAU HOLDING and REVO INSURANCE

0.77

Correlation Coefficient

SCHALTBAU HOLDING  REVO INSURANCE

Poor diversification

The 3 months correlation between SCHALTBAU and REVO is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SCHALTBAU HOLDING and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA and SCHALTBAU HOLDING 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 SCHALTBAU HOLDING are associated (or correlated) with REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of SCHALTBAU HOLDING i.e., SCHALTBAU HOLDING and REVO INSURANCE go up and down completely randomly.

Pair Corralation between SCHALTBAU HOLDING and REVO INSURANCE

Assuming the 90 days trading horizon SCHALTBAU HOLDING is expected to generate 9.81 times less return on investment than REVO INSURANCE. But when comparing it to its historical volatility, SCHALTBAU HOLDING is 2.99 times less risky than REVO INSURANCE. It trades about 0.05 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  984.00  in REVO INSURANCE SPA on October 9, 2024 and sell it today you would earn a total of  181.00  from holding REVO INSURANCE SPA or generate 18.39% return on investment over 90 days.

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

SCHALTBAU HOLDING  vs.  REVO INSURANCE SPA

SCHALTBAU HOLDING

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SCHALTBAU HOLDING are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, SCHALTBAU HOLDING is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

REVO INSURANCE SPA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REVO INSURANCE SPA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REVO INSURANCE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCHALTBAU HOLDING and REVO INSURANCE

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

The idea behind SCHALTBAU HOLDING and REVO INSURANCE SPA 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..