Correlation Between HAMMONIA Schiffsholding and POLENERGIA

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

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

Diversification Opportunities for HAMMONIA Schiffsholding and POLENERGIA

-0.51

Correlation Coefficient

HAMMONIA Schiffsholding  POLENERGIA

Excellent diversification

The 3 months correlation between HAMMONIA and POLENERGIA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding HAMMONIA Schiffsholding AG and POLENERGIA SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLENERGIA SA ZY and HAMMONIA Schiffsholding 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 HAMMONIA Schiffsholding AG are associated (or correlated) with POLENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLENERGIA SA ZY has no effect on the direction of HAMMONIA Schiffsholding i.e., HAMMONIA Schiffsholding and POLENERGIA go up and down completely randomly.

Pair Corralation between HAMMONIA Schiffsholding and POLENERGIA

Assuming the 90 days trading horizon HAMMONIA Schiffsholding AG is expected to under-perform the POLENERGIA. In addition to that, HAMMONIA Schiffsholding is 1.15 times more volatile than POLENERGIA SA ZY. It trades about -0.04 of its total potential returns per unit of risk. POLENERGIA SA ZY is currently generating about 0.04 per unit of volatility. If you would invest  1,570  in POLENERGIA SA ZY on September 19, 2024 and sell it today you would earn a total of  60.00  from holding POLENERGIA SA ZY or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

HAMMONIA Schiffsholding AG  vs.  POLENERGIA SA ZY

HAMMONIA Schiffsholding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HAMMONIA Schiffsholding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HAMMONIA Schiffsholding is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

POLENERGIA SA ZY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in POLENERGIA SA ZY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, POLENERGIA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HAMMONIA Schiffsholding and POLENERGIA

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

The idea behind HAMMONIA Schiffsholding AG and POLENERGIA SA ZY 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.