Correlation Between Winmark and Ceconomy

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

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

Diversification Opportunities for Winmark and Ceconomy

-0.81

Correlation Coefficient

Winmark  Ceconomy

Pay attention - limited upside

The 3 months correlation between Winmark and Ceconomy is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Ceconomy AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceconomy AG ADR and Winmark 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 Winmark are associated (or correlated) with Ceconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceconomy AG ADR has no effect on the direction of Winmark i.e., Winmark and Ceconomy go up and down completely randomly.

Pair Corralation between Winmark and Ceconomy

Given the investment horizon of 90 days Winmark is expected to under-perform the Ceconomy. But the stock apears to be less risky and, when comparing its historical volatility, Winmark is 2.46 times less risky than Ceconomy. The stock trades about -0.2 of its potential returns per unit of risk. The Ceconomy AG ADR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Ceconomy AG ADR on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Ceconomy AG ADR or generate 27.27% return on investment over 90 days.

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

Winmark  vs.  Ceconomy AG ADR

Winmark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat 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.

Ceconomy AG ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ceconomy AG ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Ceconomy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winmark and Ceconomy

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

The idea behind Winmark and Ceconomy AG ADR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.