Correlation Between Gelsenwasser and HomeToGo

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

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

Diversification Opportunities for Gelsenwasser and HomeToGo

-0.3

Correlation Coefficient

Gelsenwasser  HomeToGo

Very good diversification

The 3 months correlation between Gelsenwasser and HomeToGo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE and Gelsenwasser 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 Gelsenwasser AG are associated (or correlated) with HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Gelsenwasser i.e., Gelsenwasser and HomeToGo go up and down completely randomly.

Pair Corralation between Gelsenwasser and HomeToGo

Assuming the 90 days horizon Gelsenwasser AG is expected to under-perform the HomeToGo. But the stock apears to be less risky and, when comparing its historical volatility, Gelsenwasser AG is 1.05 times less risky than HomeToGo. The stock trades about -0.02 of its potential returns per unit of risk. The HomeToGo SE is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  311.00  in HomeToGo SE on October 4, 2024 and sell it today you would lose (116.00) from holding HomeToGo SE or give up 37.3% of portfolio value over 90 days.

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

Gelsenwasser AG  vs.  HomeToGo SE

Gelsenwasser AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gelsenwasser AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gelsenwasser may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HomeToGo SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeToGo SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, HomeToGo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gelsenwasser and HomeToGo

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

The idea behind Gelsenwasser AG and HomeToGo SE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.