Correlation Between Tradegate and EVS Broadcast

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

By analyzing existing cross correlation between Tradegate AG Wertpapierhandelsbank and EVS Broadcast Equipment, you can compare the effects of market volatilities on Tradegate and EVS Broadcast 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 Tradegate with a short position of EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradegate and EVS Broadcast.

Diversification Opportunities for Tradegate and EVS Broadcast

-0.54

Correlation Coefficient

Tradegate  EVS Broadcast

Excellent diversification

The 3 months correlation between Tradegate and EVS is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment and Tradegate 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 Tradegate AG Wertpapierhandelsbank are associated (or correlated) with EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Tradegate i.e., Tradegate and EVS Broadcast go up and down completely randomly.

Pair Corralation between Tradegate and EVS Broadcast

Assuming the 90 days horizon Tradegate is expected to generate 1160.75 times less return on investment than EVS Broadcast. But when comparing it to its historical volatility, Tradegate AG Wertpapierhandelsbank is 6.29 times less risky than EVS Broadcast. It trades about 0.0 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,065  in EVS Broadcast Equipment on December 11, 2024 and sell it today you would earn a total of  635.00  from holding EVS Broadcast Equipment or generate 20.72% return on investment over 90 days.

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

Tradegate AG Wertpapierhandels  vs.  EVS Broadcast Equipment

Tradegate AG Wertpap

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tradegate AG Wertpapierhandelsbank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tradegate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

EVS Broadcast Equipment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EVS Broadcast unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tradegate and EVS Broadcast

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

The idea behind Tradegate AG Wertpapierhandelsbank and EVS Broadcast Equipment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.