Correlation Between Traton SE and KOMATSU
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By analyzing existing cross correlation between Traton SE and KOMATSU LTD SPONS, you can compare the effects of market volatilities on Traton SE and KOMATSU 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 KOMATSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Traton SE and KOMATSU.
Diversification Opportunities for Traton SE and KOMATSU
Good diversification
The 3 months correlation between Traton and KOMATSU is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Traton SE and KOMATSU LTD SPONS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOMATSU LTD SPONS 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 KOMATSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOMATSU LTD SPONS has no effect on the direction of Traton SE i.e., Traton SE and KOMATSU go up and down completely randomly.
Pair Corralation between Traton SE and KOMATSU
Assuming the 90 days trading horizon Traton SE is expected to generate 1.02 times more return on investment than KOMATSU. However, Traton SE is 1.02 times more volatile than KOMATSU LTD SPONS. It trades about 0.06 of its potential returns per unit of risk. KOMATSU LTD SPONS is currently generating about 0.02 per unit of risk. If you would invest 1,929 in Traton SE on September 24, 2024 and sell it today you would earn a total of 831.00 from holding Traton SE or generate 43.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Traton SE vs. KOMATSU LTD SPONS
Performance |
Timeline |
Traton SE |
KOMATSU LTD SPONS |
Traton SE and KOMATSU Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Traton SE and KOMATSU
The main advantage of trading using opposite Traton SE and KOMATSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Traton SE position performs unexpectedly, KOMATSU 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 KOMATSU will offset losses from the drop in KOMATSU's long position.The idea behind Traton SE and KOMATSU LTD SPONS 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.Check out your portfolio center.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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