Correlation Between TAMBANG BATUBARA and Vonovia SE

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

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

Diversification Opportunities for TAMBANG BATUBARA and Vonovia SE

-0.53

Correlation Coefficient

TAMBANG BATUBARA  Vonovia SE

Excellent diversification

The 3 months correlation between TAMBANG and Vonovia is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding TAMBANG BATUBARA B and Vonovia SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE and TAMBANG BATUBARA 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 TAMBANG BATUBARA B are associated (or correlated) with Vonovia SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vonovia SE has no effect on the direction of TAMBANG BATUBARA i.e., TAMBANG BATUBARA and Vonovia SE go up and down completely randomly.

Pair Corralation between TAMBANG BATUBARA and Vonovia SE

Assuming the 90 days trading horizon TAMBANG BATUBARA B is expected to generate 2.2 times more return on investment than Vonovia SE. However, TAMBANG BATUBARA is 2.2 times more volatile than Vonovia SE. It trades about 0.1 of its potential returns per unit of risk. Vonovia SE is currently generating about -0.06 per unit of risk. If you would invest  15.00  in TAMBANG BATUBARA B on September 12, 2024 and sell it today you would earn a total of  3.00  from holding TAMBANG BATUBARA B or generate 20.0% return on investment over 90 days.

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

TAMBANG BATUBARA B   vs.  Vonovia SE

TAMBANG BATUBARA B

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAMBANG BATUBARA B are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TAMBANG BATUBARA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vonovia SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vonovia SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vonovia SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TAMBANG BATUBARA and Vonovia SE

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

The idea behind TAMBANG BATUBARA B and Vonovia SE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.