Correlation Between Carl Zeiss and Hoya Corp

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

By analyzing existing cross correlation between Carl Zeiss Meditec and Hoya Corp, you can compare the effects of market volatilities on Carl Zeiss and Hoya Corp 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 Carl Zeiss with a short position of Hoya Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carl Zeiss and Hoya Corp.

Diversification Opportunities for Carl Zeiss and Hoya Corp

0.56

Correlation Coefficient

Carl Zeiss  Hoya Corp

Very weak diversification

The 3 months correlation between Carl and Hoya is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Carl Zeiss Meditec and Hoya Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoya Corp and Carl Zeiss 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 Carl Zeiss Meditec are associated (or correlated) with Hoya Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoya Corp has no effect on the direction of Carl Zeiss i.e., Carl Zeiss and Hoya Corp go up and down completely randomly.

Pair Corralation between Carl Zeiss and Hoya Corp

Assuming the 90 days horizon Carl Zeiss Meditec is expected to under-perform the Hoya Corp. In addition to that, Carl Zeiss is 2.14 times more volatile than Hoya Corp. It trades about -0.04 of its total potential returns per unit of risk. Hoya Corp is currently generating about -0.04 per unit of volatility. If you would invest  13,589  in Hoya Corp on September 1, 2024 and sell it today you would lose (699.00) from holding Hoya Corp or give up 5.14% of portfolio value over 90 days.

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

Carl Zeiss Meditec  vs.  Hoya Corp

Carl Zeiss Meditec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carl Zeiss Meditec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hoya Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoya Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hoya Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carl Zeiss and Hoya Corp

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

The idea behind Carl Zeiss Meditec and Hoya Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.