Correlation Between EVN AG and Facc AG
Can any of the company-specific risk be diversified away by investing in both EVN AG and Facc AG 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 EVN AG and Facc AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVN AG and Facc AG, you can compare the effects of market volatilities on EVN AG and Facc AG 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 EVN AG with a short position of Facc AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVN AG and Facc AG.
Diversification Opportunities for EVN AG and Facc AG
Poor diversification
The 3 months correlation between EVN and Facc is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding EVN AG and Facc AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Facc AG and EVN 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 EVN AG are associated (or correlated) with Facc AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Facc AG has no effect on the direction of EVN AG i.e., EVN AG and Facc AG go up and down completely randomly.
Pair Corralation between EVN AG and Facc AG
Assuming the 90 days trading horizon EVN AG is expected to under-perform the Facc AG. But the stock apears to be less risky and, when comparing its historical volatility, EVN AG is 1.54 times less risky than Facc AG. The stock trades about -0.15 of its potential returns per unit of risk. The Facc AG is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 648.00 in Facc AG on August 28, 2024 and sell it today you would lose (24.00) from holding Facc AG or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EVN AG vs. Facc AG
Performance |
| Timeline |
| EVN AG |
| Facc AG |
EVN AG and Facc AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVN AG and Facc AG
The main advantage of trading using opposite EVN AG and Facc AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVN AG position performs unexpectedly, Facc AG 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 Facc AG will offset losses from the drop in Facc AG's long position.The idea behind EVN AG and Facc AG 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.| Facc AG vs. Voestalpine AG | Facc AG vs. Lenzing Aktiengesellschaft | Facc AG vs. AT S Austria | Facc AG vs. OMV Aktiengesellschaft |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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