Correlation Between Sixt SE and UPDATE SOFTWARE

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

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

Diversification Opportunities for Sixt SE and UPDATE SOFTWARE

-0.24

Correlation Coefficient

Sixt SE  UPDATE SOFTWARE

Very good diversification

The 3 months correlation between Sixt and UPDATE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sixt SE and UPDATE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPDATE SOFTWARE and Sixt SE 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 Sixt SE are associated (or correlated) with UPDATE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPDATE SOFTWARE has no effect on the direction of Sixt SE i.e., Sixt SE and UPDATE SOFTWARE go up and down completely randomly.

Pair Corralation between Sixt SE and UPDATE SOFTWARE

Assuming the 90 days trading horizon Sixt SE is expected to generate 0.53 times more return on investment than UPDATE SOFTWARE. However, Sixt SE is 1.87 times less risky than UPDATE SOFTWARE. It trades about 0.18 of its potential returns per unit of risk. UPDATE SOFTWARE is currently generating about 0.01 per unit of risk. If you would invest  5,361  in Sixt SE on April 24, 2025 and sell it today you would earn a total of  999.00  from holding Sixt SE or generate 18.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sixt SE  vs.  UPDATE SOFTWARE

Sixt SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt SE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Sixt SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

UPDATE SOFTWARE

Risk-Adjusted Performance

Very Weak

Over the last 90 days UPDATE SOFTWARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, UPDATE SOFTWARE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sixt SE and UPDATE SOFTWARE

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

The idea behind Sixt SE and UPDATE SOFTWARE 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.