Correlation Between Varta AG and MAINZ BIOMED

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

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

Diversification Opportunities for Varta AG and MAINZ BIOMED

0.67

Correlation Coefficient

Varta AG  MAINZ BIOMED

Poor diversification

The 3 months correlation between Varta and MAINZ is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and MAINZ BIOMED BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAINZ BIOMED BV 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 MAINZ BIOMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAINZ BIOMED BV has no effect on the direction of Varta AG i.e., Varta AG and MAINZ BIOMED go up and down completely randomly.

Pair Corralation between Varta AG and MAINZ BIOMED

Assuming the 90 days trading horizon Varta AG is expected to generate 0.95 times more return on investment than MAINZ BIOMED. However, Varta AG is 1.06 times less risky than MAINZ BIOMED. It trades about -0.02 of its potential returns per unit of risk. MAINZ BIOMED BV is currently generating about -0.03 per unit of risk. If you would invest  2,550  in Varta AG on September 26, 2024 and sell it today you would lose (2,398) from holding Varta AG or give up 94.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Varta AG  vs.  MAINZ BIOMED BV

Varta AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Varta AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Varta AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

MAINZ BIOMED BV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MAINZ BIOMED BV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MAINZ BIOMED reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Varta AG and MAINZ BIOMED

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

The idea behind Varta AG and MAINZ BIOMED BV 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.