Correlation Between Volkswagen and Coloseum Holding

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

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

Diversification Opportunities for Volkswagen and Coloseum Holding

0.66

Correlation Coefficient

Volkswagen  Coloseum Holding

Poor diversification

The 3 months correlation between Volkswagen and Coloseum is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Coloseum Holding as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloseum Holding and Volkswagen 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 Volkswagen AG are associated (or correlated) with Coloseum Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloseum Holding has no effect on the direction of Volkswagen i.e., Volkswagen and Coloseum Holding go up and down completely randomly.

Pair Corralation between Volkswagen and Coloseum Holding

Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.58 times more return on investment than Coloseum Holding. However, Volkswagen AG is 1.71 times less risky than Coloseum Holding. It trades about 0.18 of its potential returns per unit of risk. Coloseum Holding as is currently generating about 0.04 per unit of risk. If you would invest  208,350  in Volkswagen AG on December 1, 2024 and sell it today you would earn a total of  57,550  from holding Volkswagen AG or generate 27.62% return on investment over 90 days.

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

Volkswagen AG  vs.  Coloseum Holding as

Volkswagen AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Volkswagen reported solid returns over the last few months and may actually be approaching a breakup point.

Coloseum Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coloseum Holding as are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Coloseum Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Volkswagen and Coloseum Holding

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

The idea behind Volkswagen AG and Coloseum Holding as 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 Commodity Directory module to find actively traded commodities issued by global exchanges.