Correlation Between DAX and Heliospectra

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

Diversification Opportunities for DAX and Heliospectra

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between DAX and Heliospectra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DAX and Heliospectra AB Namn Akt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heliospectra AB Namn and DAX 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 DAX are associated (or correlated) with Heliospectra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heliospectra AB Namn has no effect on the direction of DAX i.e., DAX and Heliospectra go up and down completely randomly.
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Pair Corralation between DAX and Heliospectra

If you would invest (100.00)  in Heliospectra AB Namn on June 27, 2022 and sell it today you would earn a total of  100.00  from holding Heliospectra AB Namn or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

DAX  vs.  Heliospectra AB Namn Akt

 Performance (%) 
       Timeline  

DAX and Heliospectra Volatility Contrast

   Predicted Return Density   
       Returns  

DAX

Pair trading matchups for DAX

The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DAX as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DAX's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DAX's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DAX.

Pair Trading with DAX and Heliospectra

The main advantage of trading using opposite DAX and Heliospectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX position performs unexpectedly, Heliospectra 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 Heliospectra will offset losses from the drop in Heliospectra's long position.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DAX as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DAX's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DAX's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DAX.
The idea behind DAX and Heliospectra AB Namn 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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Check out your portfolio center. 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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