Correlation Between Austriacard Holdings and Dromeas SA
Can any of the company-specific risk be diversified away by investing in both Austriacard Holdings and Dromeas SA 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 Austriacard Holdings and Dromeas SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austriacard Holdings AG and Dromeas SA, you can compare the effects of market volatilities on Austriacard Holdings and Dromeas SA 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 Austriacard Holdings with a short position of Dromeas SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austriacard Holdings and Dromeas SA.
Diversification Opportunities for Austriacard Holdings and Dromeas SA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Austriacard and Dromeas is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Austriacard Holdings AG and Dromeas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dromeas SA and Austriacard Holdings 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 Austriacard Holdings AG are associated (or correlated) with Dromeas SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dromeas SA has no effect on the direction of Austriacard Holdings i.e., Austriacard Holdings and Dromeas SA go up and down completely randomly.
Pair Corralation between Austriacard Holdings and Dromeas SA
Assuming the 90 days trading horizon Austriacard Holdings AG is expected to under-perform the Dromeas SA. But the stock apears to be less risky and, when comparing its historical volatility, Austriacard Holdings AG is 2.08 times less risky than Dromeas SA. The stock trades about -0.04 of its potential returns per unit of risk. The Dromeas SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Dromeas SA on August 30, 2024 and sell it today you would lose (2.00) from holding Dromeas SA or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Austriacard Holdings AG vs. Dromeas SA
Performance |
| Timeline |
| Austriacard Holdings |
| Dromeas SA |
Austriacard Holdings and Dromeas SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austriacard Holdings and Dromeas SA
The main advantage of trading using opposite Austriacard Holdings and Dromeas SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austriacard Holdings position performs unexpectedly, Dromeas SA 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 Dromeas SA will offset losses from the drop in Dromeas SA's long position.The idea behind Austriacard Holdings AG and Dromeas SA 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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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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