Correlation Between Tradegate and ROHM

Can any of the company-specific risk be diversified away by investing in both Tradegate and ROHM 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 ROHM 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 ROHM Co, you can compare the effects of market volatilities on Tradegate and ROHM 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 ROHM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradegate and ROHM.

Diversification Opportunities for Tradegate and ROHM

-0.26

Correlation Coefficient

Tradegate  ROHM

Very good diversification

The 3 months correlation between Tradegate and ROHM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and ROHM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROHM 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 ROHM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROHM has no effect on the direction of Tradegate i.e., Tradegate and ROHM go up and down completely randomly.

Pair Corralation between Tradegate and ROHM

Assuming the 90 days horizon Tradegate AG Wertpapierhandelsbank is expected to generate 0.23 times more return on investment than ROHM. However, Tradegate AG Wertpapierhandelsbank is 4.38 times less risky than ROHM. It trades about 0.0 of its potential returns per unit of risk. ROHM Co is currently generating about 0.0 per unit of risk. If you would invest  8,850  in Tradegate AG Wertpapierhandelsbank on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Tradegate AG Wertpapierhandelsbank or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Tradegate AG Wertpapierhandels  vs.  ROHM Co

Tradegate AG Wertpap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tradegate AG Wertpapierhandelsbank has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

ROHM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROHM Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Tradegate and ROHM

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

The idea behind Tradegate AG Wertpapierhandelsbank and ROHM Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.