Correlation Between Varta AG and MONGOLIAN MINING

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

By analyzing existing cross correlation between Varta AG and MONGOLIAN MINING CRPREGS, you can compare the effects of market volatilities on Varta AG and MONGOLIAN MINING 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 MONGOLIAN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and MONGOLIAN MINING.

Diversification Opportunities for Varta AG and MONGOLIAN MINING

0.71

Correlation Coefficient

Varta AG  MONGOLIAN MINING

Poor diversification

The 3 months correlation between Varta and MONGOLIAN is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and MONGOLIAN MINING CRPREGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONGOLIAN MINING CRPREGS 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 MONGOLIAN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONGOLIAN MINING CRPREGS has no effect on the direction of Varta AG i.e., Varta AG and MONGOLIAN MINING go up and down completely randomly.

Pair Corralation between Varta AG and MONGOLIAN MINING

Assuming the 90 days trading horizon Varta AG is expected to under-perform the MONGOLIAN MINING. In addition to that, Varta AG is 1.62 times more volatile than MONGOLIAN MINING CRPREGS. It trades about -0.41 of its total potential returns per unit of risk. MONGOLIAN MINING CRPREGS is currently generating about -0.31 per unit of volatility. If you would invest  101.00  in MONGOLIAN MINING CRPREGS on September 23, 2024 and sell it today you would lose (14.00) from holding MONGOLIAN MINING CRPREGS or give up 13.86% of portfolio value over 90 days.

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

Varta AG  vs.  MONGOLIAN MINING CRPREGS

Varta AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Varta AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Varta AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

MONGOLIAN MINING CRPREGS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MONGOLIAN MINING CRPREGS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MONGOLIAN MINING 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 MONGOLIAN MINING

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

The idea behind Varta AG and MONGOLIAN MINING CRPREGS 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.