Correlation Between Austrian Traded and RHI Magnesita
Can any of the company-specific risk be diversified away by investing in both Austrian Traded and RHI Magnesita 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 Austrian Traded and RHI Magnesita into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austrian Traded Index and RHI Magnesita NV, you can compare the effects of market volatilities on Austrian Traded and RHI Magnesita 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 Austrian Traded with a short position of RHI Magnesita. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austrian Traded and RHI Magnesita.
Diversification Opportunities for Austrian Traded and RHI Magnesita
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Austrian and RHI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Austrian Traded Index and RHI Magnesita NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RHI Magnesita NV and Austrian Traded 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 Austrian Traded Index are associated (or correlated) with RHI Magnesita. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RHI Magnesita NV has no effect on the direction of Austrian Traded i.e., Austrian Traded and RHI Magnesita go up and down completely randomly.
Pair Corralation between Austrian Traded and RHI Magnesita
Assuming the 90 days trading horizon Austrian Traded is expected to generate 1.82 times less return on investment than RHI Magnesita. But when comparing it to its historical volatility, Austrian Traded Index is 2.89 times less risky than RHI Magnesita. It trades about 0.08 of its potential returns per unit of risk. RHI Magnesita NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,920 in RHI Magnesita NV on September 19, 2024 and sell it today you would earn a total of 880.00 from holding RHI Magnesita NV or generate 30.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austrian Traded Index vs. RHI Magnesita NV
Performance |
| Timeline |
Austrian Traded and RHI Magnesita Volatility Contrast
Predicted Return Density |
| Returns |
Austrian Traded Index
Pair trading matchups for Austrian Traded
RHI Magnesita NV
Pair trading matchups for RHI Magnesita
Pair Trading with Austrian Traded and RHI Magnesita
The main advantage of trading using opposite Austrian Traded and RHI Magnesita positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austrian Traded position performs unexpectedly, RHI Magnesita 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 RHI Magnesita will offset losses from the drop in RHI Magnesita's long position.| Austrian Traded vs. UNIQA Insurance Group | Austrian Traded vs. Vienna Insurance Group | Austrian Traded vs. BKS Bank AG | Austrian Traded vs. SBM Offshore NV |
| RHI Magnesita vs. AT S Austria | RHI Magnesita vs. Wienerberger AG | RHI Magnesita vs. Lenzing Aktiengesellschaft | RHI Magnesita vs. Voestalpine 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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