Correlation Between Dell Technologies and Mühlbauer Holding

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

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

Diversification Opportunities for Dell Technologies and Mühlbauer Holding

-0.84

Correlation Coefficient

Dell Technologies  Mühlbauer Holding

Pay attention - limited upside

The 3 months correlation between Dell and Mühlbauer is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mühlbauer Holding and Dell Technologies 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 Dell Technologies are associated (or correlated) with Mühlbauer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mühlbauer Holding has no effect on the direction of Dell Technologies i.e., Dell Technologies and Mühlbauer Holding go up and down completely randomly.

Pair Corralation between Dell Technologies and Mühlbauer Holding

Assuming the 90 days trading horizon Dell Technologies is expected to generate 1.59 times more return on investment than Mühlbauer Holding. However, Dell Technologies is 1.59 times more volatile than Mhlbauer Holding AG. It trades about 0.09 of its potential returns per unit of risk. Mhlbauer Holding AG is currently generating about -0.26 per unit of risk. If you would invest  10,493  in Dell Technologies on August 31, 2024 and sell it today you would earn a total of  1,607  from holding Dell Technologies or generate 15.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Dell Technologies  vs.  Mhlbauer Holding AG

Dell Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Dell Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Mühlbauer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mhlbauer Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dell Technologies and Mühlbauer Holding

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

The idea behind Dell Technologies and Mhlbauer Holding 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.