Correlation Between Traton SE and EEducation Albert

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

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

Diversification Opportunities for Traton SE and EEducation Albert

-0.42

Correlation Coefficient

Traton SE  EEducation Albert

Very good diversification

The 3 months correlation between Traton and EEducation is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Traton SE and eEducation Albert AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eEducation Albert and Traton SE 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 Traton SE are associated (or correlated) with EEducation Albert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eEducation Albert has no effect on the direction of Traton SE i.e., Traton SE and EEducation Albert go up and down completely randomly.

Pair Corralation between Traton SE and EEducation Albert

Assuming the 90 days trading horizon Traton SE is expected to under-perform the EEducation Albert. In addition to that, Traton SE is 1.14 times more volatile than eEducation Albert AB. It trades about -0.07 of its total potential returns per unit of risk. eEducation Albert AB is currently generating about -0.04 per unit of volatility. If you would invest  366.00  in eEducation Albert AB on September 3, 2024 and sell it today you would lose (7.00) from holding eEducation Albert AB or give up 1.91% of portfolio value over 90 days.

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

Traton SE  vs.  eEducation Albert AB

Traton SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

eEducation Albert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eEducation Albert AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Traton SE and EEducation Albert

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

The idea behind Traton SE and eEducation Albert AB 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.