Correlation Between RATIONAL Aktiengesellscha and GEA GROUP

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

By analyzing existing cross correlation between RATIONAL Aktiengesellschaft and GEA GROUP, you can compare the effects of market volatilities on RATIONAL Aktiengesellscha and GEA GROUP 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 RATIONAL Aktiengesellscha with a short position of GEA GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of RATIONAL Aktiengesellscha and GEA GROUP.

Diversification Opportunities for RATIONAL Aktiengesellscha and GEA GROUP

-0.39

Correlation Coefficient

RATIONAL Aktiengesellscha  GEA GROUP

Very good diversification

The 3 months correlation between RATIONAL and GEA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding RATIONAL Aktiengesellschaft and GEA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA GROUP and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellschaft are associated (or correlated) with GEA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA GROUP has no effect on the direction of RATIONAL Aktiengesellscha i.e., RATIONAL Aktiengesellscha and GEA GROUP go up and down completely randomly.

Pair Corralation between RATIONAL Aktiengesellscha and GEA GROUP

Assuming the 90 days trading horizon RATIONAL Aktiengesellschaft is expected to under-perform the GEA GROUP. In addition to that, RATIONAL Aktiengesellscha is 1.47 times more volatile than GEA GROUP. It trades about -0.28 of its total potential returns per unit of risk. GEA GROUP is currently generating about 0.21 per unit of volatility. If you would invest  4,634  in GEA GROUP on September 27, 2024 and sell it today you would earn a total of  172.00  from holding GEA GROUP or generate 3.71% return on investment over 90 days.

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

RATIONAL Aktiengesellschaft  vs.  GEA GROUP

RATIONAL Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RATIONAL Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GEA GROUP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEA GROUP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GEA GROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RATIONAL Aktiengesellscha and GEA GROUP

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

The idea behind RATIONAL Aktiengesellschaft and GEA GROUP 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.