Correlation Between UmweltBank and TRAINLINE PLC

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

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

Diversification Opportunities for UmweltBank and TRAINLINE PLC

0.16

Correlation Coefficient

UmweltBank  TRAINLINE PLC

Average diversification

The 3 months correlation between UmweltBank and TRAINLINE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS and UmweltBank 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 UmweltBank AG are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of UmweltBank i.e., UmweltBank and TRAINLINE PLC go up and down completely randomly.

Pair Corralation between UmweltBank and TRAINLINE PLC

Assuming the 90 days trading horizon UmweltBank AG is expected to under-perform the TRAINLINE PLC. But the stock apears to be less risky and, when comparing its historical volatility, UmweltBank AG is 1.83 times less risky than TRAINLINE PLC. The stock trades about -0.02 of its potential returns per unit of risk. The TRAINLINE PLC LS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  330.00  in TRAINLINE PLC LS on March 24, 2025 and sell it today you would lose (8.00) from holding TRAINLINE PLC LS or give up 2.42% of portfolio value over 90 days.

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

UmweltBank AG  vs.  TRAINLINE PLC LS

UmweltBank AG

Risk-Adjusted Performance

Very Weak

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

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRAINLINE PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UmweltBank and TRAINLINE PLC

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

The idea behind UmweltBank AG and TRAINLINE PLC LS 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 Transaction History module to view history of all your transactions and understand their impact on performance.