Correlation Between Arma Services and TUI AG

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

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

Diversification Opportunities for Arma Services and TUI AG

0.0

Correlation Coefficient

Arma Services  TUI AG

Pay attention - limited upside

The 3 months correlation between Arma and TUI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arma Services and TUI AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TUI AG and Arma Services 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 Arma Services are associated (or correlated) with TUI AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TUI AG has no effect on the direction of Arma Services i.e., Arma Services and TUI AG go up and down completely randomly.

Pair Corralation between Arma Services and TUI AG

Given the investment horizon of 90 days Arma Services is expected to under-perform the TUI AG. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arma Services is 13.37 times less risky than TUI AG. The pink sheet trades about -0.06 of its potential returns per unit of risk. The TUI AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  176.00  in TUI AG on September 3, 2024 and sell it today you would earn a total of  629.00  from holding TUI AG or generate 357.39% return on investment over 90 days.

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

Arma Services  vs.  TUI AG

Arma Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arma Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Arma Services is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TUI AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TUI AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, TUI AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arma Services and TUI AG

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

The idea behind Arma Services and TUI 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.