Correlation Between Trainline Plc and Krones AG

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

By analyzing existing cross correlation between Trainline Plc and Krones AG ON, you can compare the effects of market volatilities on Trainline Plc and Krones AG 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 Trainline Plc with a short position of Krones AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trainline Plc and Krones AG.

Diversification Opportunities for Trainline Plc and Krones AG

-0.78

Correlation Coefficient

Trainline Plc  Krones AG

Pay attention - limited upside

The 3 months correlation between Trainline and Krones is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Trainline Plc and Krones AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krones AG ON and Trainline Plc 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 Trainline Plc are associated (or correlated) with Krones AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krones AG ON has no effect on the direction of Trainline Plc i.e., Trainline Plc and Krones AG go up and down completely randomly.

Pair Corralation between Trainline Plc and Krones AG

Assuming the 90 days trading horizon Trainline Plc is expected to generate 1.91 times more return on investment than Krones AG. However, Trainline Plc is 1.91 times more volatile than Krones AG ON. It trades about 0.22 of its potential returns per unit of risk. Krones AG ON is currently generating about 0.02 per unit of risk. If you would invest  32,900  in Trainline Plc on September 13, 2024 and sell it today you would earn a total of  10,580  from holding Trainline Plc or generate 32.16% return on investment over 90 days.

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

Trainline Plc  vs.  Krones AG ON

Trainline Plc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trainline Plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Trainline Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Krones AG ON

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Krones AG ON are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Krones AG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Trainline Plc and Krones AG

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

The idea behind Trainline Plc and Krones AG ON 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.