Correlation Between Vonovia SE and Frp Holdings

Can any of the company-specific risk be diversified away by investing in both Vonovia SE and Frp Holdings 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 Vonovia SE and Frp Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vonovia SE ADR and Frp Holdings Ord, you can compare the effects of market volatilities on Vonovia SE and Frp Holdings 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 Vonovia SE with a short position of Frp Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vonovia SE and Frp Holdings.

Diversification Opportunities for Vonovia SE and Frp Holdings

0.79

Correlation Coefficient

Vonovia SE  Frp Holdings

Poor diversification

The 3 months correlation between Vonovia and Frp is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vonovia SE ADR and Frp Holdings Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frp Holdings Ord and Vonovia SE 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 Vonovia SE ADR are associated (or correlated) with Frp Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frp Holdings Ord has no effect on the direction of Vonovia SE i.e., Vonovia SE and Frp Holdings go up and down completely randomly.

Pair Corralation between Vonovia SE and Frp Holdings

Assuming the 90 days horizon Vonovia SE ADR is expected to under-perform the Frp Holdings. In addition to that, Vonovia SE is 1.31 times more volatile than Frp Holdings Ord. It trades about -0.11 of its total potential returns per unit of risk. Frp Holdings Ord is currently generating about -0.05 per unit of volatility. If you would invest  3,026  in Frp Holdings Ord on December 28, 2024 and sell it today you would lose (140.00) from holding Frp Holdings Ord or give up 4.63% of portfolio value over 90 days.

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

Vonovia SE ADR  vs.  Frp Holdings Ord

Vonovia SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vonovia SE ADR 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 fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Frp Holdings Ord

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frp Holdings Ord has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Frp Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vonovia SE and Frp Holdings

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

The idea behind Vonovia SE ADR and Frp Holdings Ord 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.