Correlation Between DEUTSCHE WOHNEN and Pruksa Holding

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

By analyzing existing cross correlation between DEUTSCHE WOHNEN ADRS12 and Pruksa Holding Public, you can compare the effects of market volatilities on DEUTSCHE WOHNEN and Pruksa 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 DEUTSCHE WOHNEN with a short position of Pruksa Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEUTSCHE WOHNEN and Pruksa Holding.

Diversification Opportunities for DEUTSCHE WOHNEN and Pruksa Holding

0.63

Correlation Coefficient

DEUTSCHE WOHNEN  Pruksa Holding

Poor diversification

The 3 months correlation between DEUTSCHE and Pruksa is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE WOHNEN ADRS12 and Pruksa Holding Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pruksa Holding Public and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN ADRS12 are associated (or correlated) with Pruksa Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pruksa Holding Public has no effect on the direction of DEUTSCHE WOHNEN i.e., DEUTSCHE WOHNEN and Pruksa Holding go up and down completely randomly.

Pair Corralation between DEUTSCHE WOHNEN and Pruksa Holding

Assuming the 90 days trading horizon DEUTSCHE WOHNEN ADRS12 is expected to generate 0.96 times more return on investment than Pruksa Holding. However, DEUTSCHE WOHNEN ADRS12 is 1.04 times less risky than Pruksa Holding. It trades about -0.08 of its potential returns per unit of risk. Pruksa Holding Public is currently generating about -0.1 per unit of risk. If you would invest  1,270  in DEUTSCHE WOHNEN ADRS12 on September 23, 2024 and sell it today you would lose (160.00) from holding DEUTSCHE WOHNEN ADRS12 or give up 12.6% of portfolio value over 90 days.

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

DEUTSCHE WOHNEN ADRS12  vs.  Pruksa Holding Public

DEUTSCHE WOHNEN ADRS12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE WOHNEN ADRS12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pruksa Holding Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pruksa Holding Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DEUTSCHE WOHNEN and Pruksa Holding

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

The idea behind DEUTSCHE WOHNEN ADRS12 and Pruksa Holding Public 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 Commodity Directory module to find actively traded commodities issued by global exchanges.