Correlation Between Kapsch Traffic and Linz Textil
Can any of the company-specific risk be diversified away by investing in both Kapsch Traffic and Linz Textil 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 Kapsch Traffic and Linz Textil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kapsch Traffic and Linz Textil Holding, you can compare the effects of market volatilities on Kapsch Traffic and Linz Textil 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 Kapsch Traffic with a short position of Linz Textil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kapsch Traffic and Linz Textil.
Diversification Opportunities for Kapsch Traffic and Linz Textil
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kapsch and Linz is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kapsch Traffic and Linz Textil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linz Textil Holding and Kapsch Traffic 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 Kapsch Traffic are associated (or correlated) with Linz Textil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linz Textil Holding has no effect on the direction of Kapsch Traffic i.e., Kapsch Traffic and Linz Textil go up and down completely randomly.
Pair Corralation between Kapsch Traffic and Linz Textil
Assuming the 90 days trading horizon Kapsch Traffic is expected to under-perform the Linz Textil. But the stock apears to be less risky and, when comparing its historical volatility, Kapsch Traffic is 1.28 times less risky than Linz Textil. The stock trades about -0.29 of its potential returns per unit of risk. The Linz Textil Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 17,000 in Linz Textil Holding on September 2, 2024 and sell it today you would earn a total of 3,800 from holding Linz Textil Holding or generate 22.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kapsch Traffic vs. Linz Textil Holding
Performance |
| Timeline |
| Kapsch Traffic |
| Linz Textil Holding |
Kapsch Traffic and Linz Textil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kapsch Traffic and Linz Textil
The main advantage of trading using opposite Kapsch Traffic and Linz Textil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kapsch Traffic position performs unexpectedly, Linz Textil 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 Linz Textil will offset losses from the drop in Linz Textil's long position.| Kapsch Traffic vs. Lenzing Aktiengesellschaft | Kapsch Traffic vs. Vienna Insurance Group | Kapsch Traffic vs. Semperit Aktiengesellschaft Holding | Kapsch Traffic vs. EVN AG |
| Linz Textil vs. Kapsch Traffic | Linz Textil vs. Wolford Aktiengesellschaft | Linz Textil vs. AMAG Austria Metall | Linz Textil vs. Lenzing 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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