Correlation Between Constellation Software and Ströer SE

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

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

Diversification Opportunities for Constellation Software and Ströer SE

0.05

Correlation Coefficient

Constellation Software  Ströer SE

Significant diversification

The 3 months correlation between Constellation and Ströer is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Strer SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ströer SE and Constellation Software 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 Constellation Software are associated (or correlated) with Ströer SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ströer SE has no effect on the direction of Constellation Software i.e., Constellation Software and Ströer SE go up and down completely randomly.

Pair Corralation between Constellation Software and Ströer SE

Assuming the 90 days trading horizon Constellation Software is expected to generate 0.68 times more return on investment than Ströer SE. However, Constellation Software is 1.46 times less risky than Ströer SE. It trades about 0.04 of its potential returns per unit of risk. Strer SE Co is currently generating about -0.02 per unit of risk. If you would invest  300,917  in Constellation Software on April 24, 2025 and sell it today you would earn a total of  7,583  from holding Constellation Software or generate 2.52% return on investment over 90 days.

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

Constellation Software  vs.  Strer SE Co

Constellation Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Constellation Software is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ströer SE

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Constellation Software and Ströer SE

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

The idea behind Constellation Software and Strer SE Co 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.

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 the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.