Correlation Between EVN AG and Kapsch Traffic
Can any of the company-specific risk be diversified away by investing in both EVN 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 EVN 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 EVN AG and Kapsch Traffic, you can compare the effects of market volatilities on EVN 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 EVN AG with a short position of Kapsch Traffic. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVN AG and Kapsch Traffic.
Diversification Opportunities for EVN AG and Kapsch Traffic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EVN and Kapsch is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding EVN AG and Kapsch Traffic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kapsch Traffic 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 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 EVN AG i.e., EVN AG and Kapsch Traffic go up and down completely randomly.
Pair Corralation between EVN AG and Kapsch Traffic
Assuming the 90 days trading horizon EVN AG is expected to generate 1.31 times more return on investment than Kapsch Traffic. However, EVN AG is 1.31 times more volatile than Kapsch Traffic. It trades about -0.15 of its potential returns per unit of risk. Kapsch Traffic is currently generating about -0.38 per unit of risk. If you would invest 2,630 in EVN AG on August 28, 2024 and sell it today you would lose (130.00) from holding EVN AG or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EVN AG vs. Kapsch Traffic
Performance |
| Timeline |
| EVN AG |
| Kapsch Traffic |
EVN AG and Kapsch Traffic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVN AG and Kapsch Traffic
The main advantage of trading using opposite EVN AG and Kapsch Traffic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVN 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.The idea behind EVN AG and Kapsch Traffic 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.| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |