Correlation Between CeoTronics and Dermapharm Holding

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

By analyzing existing cross correlation between CeoTronics AG and Dermapharm Holding SE, you can compare the effects of market volatilities on CeoTronics and Dermapharm Holding 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 CeoTronics with a short position of Dermapharm Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CeoTronics and Dermapharm Holding.

Diversification Opportunities for CeoTronics and Dermapharm Holding

0.32

Correlation Coefficient

CeoTronics  Dermapharm Holding

Weak diversification

The 3 months correlation between CeoTronics and Dermapharm is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and Dermapharm Holding SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dermapharm Holding and CeoTronics 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 CeoTronics AG are associated (or correlated) with Dermapharm Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dermapharm Holding has no effect on the direction of CeoTronics i.e., CeoTronics and Dermapharm Holding go up and down completely randomly.

Pair Corralation between CeoTronics and Dermapharm Holding

Assuming the 90 days trading horizon CeoTronics AG is expected to generate 2.05 times more return on investment than Dermapharm Holding. However, CeoTronics is 2.05 times more volatile than Dermapharm Holding SE. It trades about -0.02 of its potential returns per unit of risk. Dermapharm Holding SE is currently generating about -0.07 per unit of risk. If you would invest  1,450  in CeoTronics AG on April 24, 2025 and sell it today you would lose (110.00) from holding CeoTronics AG or give up 7.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

CeoTronics AG  vs.  Dermapharm Holding SE

CeoTronics AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days CeoTronics AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, CeoTronics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dermapharm Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dermapharm Holding SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with CeoTronics and Dermapharm Holding

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

The idea behind CeoTronics AG and Dermapharm Holding SE 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.