Correlation Between Andritz AG and Kapsch Traffic
Can any of the company-specific risk be diversified away by investing in both Andritz AG and Kapsch Traffic 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 Andritz AG and Kapsch Traffic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andritz AG and Kapsch Traffic, you can compare the effects of market volatilities on Andritz AG and Kapsch Traffic 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 Andritz AG with a short position of Kapsch Traffic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andritz AG and Kapsch Traffic.
Diversification Opportunities for Andritz AG and Kapsch Traffic
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Andritz and Kapsch is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Andritz AG and Kapsch Traffic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kapsch Traffic and Andritz AG 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 Andritz AG are associated (or correlated) with Kapsch Traffic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kapsch Traffic has no effect on the direction of Andritz AG i.e., Andritz AG and Kapsch Traffic go up and down completely randomly.
Pair Corralation between Andritz AG and Kapsch Traffic
Assuming the 90 days trading horizon Andritz AG is expected to generate 1.08 times more return on investment than Kapsch Traffic. However, Andritz AG is 1.08 times more volatile than Kapsch Traffic. It trades about 0.02 of its potential returns per unit of risk. Kapsch Traffic is currently generating about -0.09 per unit of risk. If you would invest 5,120 in Andritz AG on September 2, 2024 and sell it today you would earn a total of 170.00 from holding Andritz AG or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Andritz AG vs. Kapsch Traffic
Performance |
| Timeline |
| Andritz AG |
| Kapsch Traffic |
Andritz AG and Kapsch Traffic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andritz AG and Kapsch Traffic
The main advantage of trading using opposite Andritz AG and Kapsch Traffic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andritz AG position performs unexpectedly, Kapsch Traffic 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 Kapsch Traffic will offset losses from the drop in Kapsch Traffic's long position.| Andritz AG vs. Voestalpine AG | Andritz AG vs. VERBUND AG | Andritz AG vs. OMV Aktiengesellschaft | Andritz AG vs. Wienerberger AG |
| Kapsch Traffic vs. Lenzing Aktiengesellschaft | Kapsch Traffic vs. Vienna Insurance Group | Kapsch Traffic vs. Semperit Aktiengesellschaft Holding | Kapsch Traffic vs. EVN AG |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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