Correlation Between Constellation Software and Hugo Boss

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

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

Diversification Opportunities for Constellation Software and Hugo Boss

-0.5

Correlation Coefficient

Constellation Software  Hugo Boss

Very good diversification

The 3 months correlation between Constellation and Hugo is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Hugo Boss AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugo Boss AG and Constellation Software 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 Constellation Software are associated (or correlated) with Hugo Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugo Boss AG has no effect on the direction of Constellation Software i.e., Constellation Software and Hugo Boss go up and down completely randomly.

Pair Corralation between Constellation Software and Hugo Boss

Assuming the 90 days trading horizon Constellation Software is expected to under-perform the Hugo Boss. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Software is 2.05 times less risky than Hugo Boss. The stock trades about -0.01 of its potential returns per unit of risk. The Hugo Boss AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,003  in Hugo Boss AG on October 10, 2024 and sell it today you would earn a total of  485.00  from holding Hugo Boss AG or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Constellation Software  vs.  Hugo Boss AG

Constellation Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Constellation Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hugo Boss AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hugo Boss AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hugo Boss exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellation Software and Hugo Boss

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

The idea behind Constellation Software and Hugo Boss AG 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.