Correlation Between Birkenstock Holding and Core Molding

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

By analyzing existing cross correlation between Birkenstock Holding plc and Core Molding Technologies, you can compare the effects of market volatilities on Birkenstock Holding and Core Molding 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 Birkenstock Holding with a short position of Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birkenstock Holding and Core Molding.

Diversification Opportunities for Birkenstock Holding and Core Molding

-0.29

Correlation Coefficient

Birkenstock Holding  Core Molding

Very good diversification

The 3 months correlation between Birkenstock and Core is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Birkenstock Holding plc and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies and Birkenstock Holding 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 Birkenstock Holding plc are associated (or correlated) with Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Birkenstock Holding i.e., Birkenstock Holding and Core Molding go up and down completely randomly.

Pair Corralation between Birkenstock Holding and Core Molding

Given the investment horizon of 90 days Birkenstock Holding plc is expected to generate 0.79 times more return on investment than Core Molding. However, Birkenstock Holding plc is 1.27 times less risky than Core Molding. It trades about 0.15 of its potential returns per unit of risk. Core Molding Technologies is currently generating about -0.05 per unit of risk. If you would invest  4,703  in Birkenstock Holding plc on March 12, 2024 and sell it today you would earn a total of  1,085  from holding Birkenstock Holding plc or generate 23.07% return on investment over 90 days.

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

Birkenstock Holding plc  vs.  Core Molding Technologies

Birkenstock Holding plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Birkenstock Holding plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Birkenstock Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Core Molding Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Molding Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary 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 Birkenstock Holding and Core Molding

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

The idea behind Birkenstock Holding plc and Core Molding Technologies 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.