Correlation Between Volkswagen and Cenntro Electric

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

By analyzing existing cross correlation between Volkswagen AG Pref and Cenntro Electric Group, you can compare the effects of market volatilities on Volkswagen and Cenntro Electric 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 Cenntro Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Cenntro Electric.

Diversification Opportunities for Volkswagen and Cenntro Electric

-0.63

Correlation Coefficient

Volkswagen  Cenntro Electric

Excellent diversification

The 3 months correlation between Volkswagen and Cenntro is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Cenntro Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenntro Electric 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 Pref are associated (or correlated) with Cenntro Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenntro Electric has no effect on the direction of Volkswagen i.e., Volkswagen and Cenntro Electric go up and down completely randomly.

Pair Corralation between Volkswagen and Cenntro Electric

Assuming the 90 days horizon Volkswagen AG Pref is expected to generate 0.32 times more return on investment than Cenntro Electric. However, Volkswagen AG Pref is 3.13 times less risky than Cenntro Electric. It trades about 0.12 of its potential returns per unit of risk. Cenntro Electric Group is currently generating about -0.04 per unit of risk. If you would invest  917.00  in Volkswagen AG Pref on December 30, 2024 and sell it today you would earn a total of  126.00  from holding Volkswagen AG Pref or generate 13.74% return on investment over 90 days.

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

Volkswagen AG Pref  vs.  Cenntro Electric Group

Volkswagen AG Pref

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG Pref are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Volkswagen showed solid returns over the last few months and may actually be approaching a breakup point.

Cenntro Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cenntro Electric Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Volkswagen and Cenntro Electric

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

The idea behind Volkswagen AG Pref and Cenntro Electric Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.