Correlation Between Varta AG and COFCO Joycome

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

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

Diversification Opportunities for Varta AG and COFCO Joycome

0.0

Correlation Coefficient

Varta AG  COFCO Joycome

Pay attention - limited upside

The 3 months correlation between Varta and COFCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods and Varta AG 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 Varta AG are associated (or correlated) with COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of Varta AG i.e., Varta AG and COFCO Joycome go up and down completely randomly.

Pair Corralation between Varta AG and COFCO Joycome

Assuming the 90 days trading horizon Varta AG is expected to under-perform the COFCO Joycome. In addition to that, Varta AG is 2.46 times more volatile than COFCO Joycome Foods. It trades about -0.01 of its total potential returns per unit of risk. COFCO Joycome Foods is currently generating about -0.01 per unit of volatility. If you would invest  29.00  in COFCO Joycome Foods on October 11, 2024 and sell it today you would lose (13.00) from holding COFCO Joycome Foods or give up 44.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Varta AG  vs.  COFCO Joycome Foods

Varta AG

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COFCO Joycome Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COFCO Joycome is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Varta AG and COFCO Joycome

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

The idea behind Varta AG and COFCO Joycome Foods 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.