Correlation Between Roth CH and Deutsche Boerse

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

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

Diversification Opportunities for Roth CH and Deutsche Boerse

-0.22

Correlation Coefficient

Roth CH  Deutsche Boerse

Very good diversification

The 3 months correlation between Roth and Deutsche is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Roth CH Acquisition and Deutsche Boerse AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Boerse AG and Roth CH 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 Roth CH Acquisition are associated (or correlated) with Deutsche Boerse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Boerse AG has no effect on the direction of Roth CH i.e., Roth CH and Deutsche Boerse go up and down completely randomly.

Pair Corralation between Roth CH and Deutsche Boerse

Given the investment horizon of 90 days Roth CH Acquisition is expected to under-perform the Deutsche Boerse. In addition to that, Roth CH is 17.91 times more volatile than Deutsche Boerse AG. It trades about -0.31 of its total potential returns per unit of risk. Deutsche Boerse AG is currently generating about 0.17 per unit of volatility. If you would invest  2,224  in Deutsche Boerse AG on September 21, 2024 and sell it today you would earn a total of  81.00  from holding Deutsche Boerse AG or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Roth CH Acquisition  vs.  Deutsche Boerse AG

Roth CH Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roth CH Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Deutsche Boerse AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Roth CH and Deutsche Boerse

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

The idea behind Roth CH Acquisition and Deutsche Boerse 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.