Correlation Between DFS Furniture and Nemetschek

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

By analyzing existing cross correlation between DFS Furniture PLC and Nemetschek AG ON, you can compare the effects of market volatilities on DFS Furniture and Nemetschek 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 DFS Furniture with a short position of Nemetschek. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Nemetschek.

Diversification Opportunities for DFS Furniture and Nemetschek

0.88

Correlation Coefficient

DFS Furniture  Nemetschek

Very poor diversification

The 3 months correlation between DFS and Nemetschek is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Nemetschek AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemetschek AG ON and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Nemetschek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemetschek AG ON has no effect on the direction of DFS Furniture i.e., DFS Furniture and Nemetschek go up and down completely randomly.

Pair Corralation between DFS Furniture and Nemetschek

Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.02 times more return on investment than Nemetschek. However, DFS Furniture is 1.02 times more volatile than Nemetschek AG ON. It trades about 0.12 of its potential returns per unit of risk. Nemetschek AG ON is currently generating about 0.02 per unit of risk. If you would invest  158.00  in DFS Furniture PLC on March 24, 2025 and sell it today you would earn a total of  25.00  from holding DFS Furniture PLC or generate 15.82% return on investment over 90 days.

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

DFS Furniture PLC  vs.  Nemetschek AG ON

DFS Furniture PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DFS Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nemetschek AG ON

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nemetschek AG ON are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Nemetschek is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with DFS Furniture and Nemetschek

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

The idea behind DFS Furniture PLC and Nemetschek AG ON 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.