Correlation Between Tradegate and DevEx Resources

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Can any of the company-specific risk be diversified away by investing in both Tradegate and DevEx Resources 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 Tradegate and DevEx Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tradegate AG Wertpapierhandelsbank and DevEx Resources Limited, you can compare the effects of market volatilities on Tradegate and DevEx Resources 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 Tradegate with a short position of DevEx Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradegate and DevEx Resources.

Diversification Opportunities for Tradegate and DevEx Resources

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Tradegate and DevEx is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and DevEx Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevEx Resources and Tradegate 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 Tradegate AG Wertpapierhandelsbank are associated (or correlated) with DevEx Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevEx Resources has no effect on the direction of Tradegate i.e., Tradegate and DevEx Resources go up and down completely randomly.

Pair Corralation between Tradegate and DevEx Resources

Assuming the 90 days horizon Tradegate AG Wertpapierhandelsbank is expected to generate 0.06 times more return on investment than DevEx Resources. However, Tradegate AG Wertpapierhandelsbank is 17.04 times less risky than DevEx Resources. It trades about 0.0 of its potential returns per unit of risk. DevEx Resources Limited is currently generating about -0.22 per unit of risk. If you would invest  8,850  in Tradegate AG Wertpapierhandelsbank on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Tradegate AG Wertpapierhandelsbank or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tradegate AG Wertpapierhandels  vs.  DevEx Resources Limited

 Performance 
       Timeline  
Tradegate AG Wertpap 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Tradegate AG Wertpapierhandelsbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tradegate is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
DevEx Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DevEx Resources Limited 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.

Tradegate and DevEx Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tradegate and DevEx Resources

The main advantage of trading using opposite Tradegate and DevEx Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradegate position performs unexpectedly, DevEx Resources 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 DevEx Resources will offset losses from the drop in DevEx Resources' long position.
The idea behind Tradegate AG Wertpapierhandelsbank and DevEx Resources Limited 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.

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