Correlation Between TechnoPro Holdings and Knorr-Bremse Aktiengesellscha

Can any of the company-specific risk be diversified away by investing in both TechnoPro Holdings and Knorr-Bremse Aktiengesellscha 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 TechnoPro Holdings and Knorr-Bremse Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TechnoPro Holdings and Knorr Bremse Aktiengesellschaft, you can compare the effects of market volatilities on TechnoPro Holdings and Knorr-Bremse Aktiengesellscha 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 TechnoPro Holdings with a short position of Knorr-Bremse Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnoPro Holdings and Knorr-Bremse Aktiengesellscha.

Diversification Opportunities for TechnoPro Holdings and Knorr-Bremse Aktiengesellscha

0.34

Correlation Coefficient

TechnoPro Holdings  Knorr-Bremse Aktiengesellscha

Weak diversification

The 3 months correlation between TechnoPro and Knorr-Bremse is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding TechnoPro Holdings and Knorr Bremse Aktiengesellschaf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knorr-Bremse Aktiengesellscha and TechnoPro Holdings 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 TechnoPro Holdings are associated (or correlated) with Knorr-Bremse Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knorr-Bremse Aktiengesellscha has no effect on the direction of TechnoPro Holdings i.e., TechnoPro Holdings and Knorr-Bremse Aktiengesellscha go up and down completely randomly.

Pair Corralation between TechnoPro Holdings and Knorr-Bremse Aktiengesellscha

Assuming the 90 days horizon TechnoPro Holdings is expected to generate 1.43 times more return on investment than Knorr-Bremse Aktiengesellscha. However, TechnoPro Holdings is 1.43 times more volatile than Knorr Bremse Aktiengesellschaft. It trades about -0.04 of its potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about -0.23 per unit of risk. If you would invest  393.00  in TechnoPro Holdings on October 5, 2024 and sell it today you would lose (26.00) from holding TechnoPro Holdings or give up 6.62% of portfolio value over 90 days.

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

TechnoPro Holdings  vs.  Knorr Bremse Aktiengesellschaf

TechnoPro Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TechnoPro Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TechnoPro Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Knorr-Bremse Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knorr Bremse Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TechnoPro Holdings and Knorr-Bremse Aktiengesellscha

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

The idea behind TechnoPro Holdings and Knorr Bremse Aktiengesellschaft 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.