Correlation Between Varta AG and COSCO SHIPPING

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

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

Diversification Opportunities for Varta AG and COSCO SHIPPING

-0.46

Correlation Coefficient

Varta AG  COSCO SHIPPING

Very good diversification

The 3 months correlation between Varta and COSCO is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and COSCO SHIPPING Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Energy 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Energy has no effect on the direction of Varta AG i.e., Varta AG and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Varta AG and COSCO SHIPPING

Assuming the 90 days trading horizon Varta AG is expected to under-perform the COSCO SHIPPING. In addition to that, Varta AG is 1.19 times more volatile than COSCO SHIPPING Energy. It trades about -0.17 of its total potential returns per unit of risk. COSCO SHIPPING Energy is currently generating about 0.26 per unit of volatility. If you would invest  72.00  in COSCO SHIPPING Energy on October 15, 2024 and sell it today you would earn a total of  12.00  from holding COSCO SHIPPING Energy or generate 16.67% return on investment over 90 days.

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

Varta AG  vs.  COSCO SHIPPING Energy

Varta AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

COSCO SHIPPING Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, COSCO SHIPPING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Varta AG and COSCO SHIPPING

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

The idea behind Varta AG and COSCO SHIPPING Energy 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.