Correlation Between Burgenland Holding and RATH Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Burgenland Holding and RATH Aktiengesellscha 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 Burgenland Holding and RATH Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burgenland Holding Aktiengesellschaft and RATH Aktiengesellschaft, you can compare the effects of market volatilities on Burgenland Holding and RATH Aktiengesellscha 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 Burgenland Holding with a short position of RATH Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burgenland Holding and RATH Aktiengesellscha.
Diversification Opportunities for Burgenland Holding and RATH Aktiengesellscha
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burgenland and RATH is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Burgenland Holding Aktiengesel and RATH Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATH Aktiengesellschaft and Burgenland 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 Burgenland Holding Aktiengesellschaft are associated (or correlated) with RATH Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATH Aktiengesellschaft has no effect on the direction of Burgenland Holding i.e., Burgenland Holding and RATH Aktiengesellscha go up and down completely randomly.
Pair Corralation between Burgenland Holding and RATH Aktiengesellscha
Assuming the 90 days trading horizon Burgenland Holding Aktiengesellschaft is expected to generate 0.74 times more return on investment than RATH Aktiengesellscha. However, Burgenland Holding Aktiengesellschaft is 1.34 times less risky than RATH Aktiengesellscha. It trades about -0.03 of its potential returns per unit of risk. RATH Aktiengesellschaft is currently generating about -0.06 per unit of risk. If you would invest 7,500 in Burgenland Holding Aktiengesellschaft on August 27, 2024 and sell it today you would lose (500.00) from holding Burgenland Holding Aktiengesellschaft or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Burgenland Holding Aktiengesel vs. RATH Aktiengesellschaft
Performance |
| Timeline |
| Burgenland Holding |
| RATH Aktiengesellschaft |
Burgenland Holding and RATH Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burgenland Holding and RATH Aktiengesellscha
The main advantage of trading using opposite Burgenland Holding and RATH Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burgenland Holding position performs unexpectedly, RATH Aktiengesellscha 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 RATH Aktiengesellscha will offset losses from the drop in RATH Aktiengesellscha's long position.| Burgenland Holding vs. EVN AG | Burgenland Holding vs. AGRANA Beteiligungs Aktiengesellschaft | Burgenland Holding vs. Palfinger AG | Burgenland Holding vs. Rosenbauer International AG |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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