Correlation Between Lenzing Aktiengesellscha and RHI Magnesita
Can any of the company-specific risk be diversified away by investing in both Lenzing Aktiengesellscha 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 Lenzing Aktiengesellscha and RHI Magnesita into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lenzing Aktiengesellschaft and RHI Magnesita NV, you can compare the effects of market volatilities on Lenzing Aktiengesellscha 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 Lenzing Aktiengesellscha with a short position of RHI Magnesita. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenzing Aktiengesellscha and RHI Magnesita.
Diversification Opportunities for Lenzing Aktiengesellscha and RHI Magnesita
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lenzing and RHI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lenzing Aktiengesellschaft 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 Lenzing Aktiengesellscha 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 Lenzing Aktiengesellschaft 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 Lenzing Aktiengesellscha i.e., Lenzing Aktiengesellscha and RHI Magnesita go up and down completely randomly.
Pair Corralation between Lenzing Aktiengesellscha and RHI Magnesita
Assuming the 90 days trading horizon Lenzing Aktiengesellschaft is expected to under-perform the RHI Magnesita. But the stock apears to be less risky and, when comparing its historical volatility, Lenzing Aktiengesellschaft is 1.01 times less risky than RHI Magnesita. The stock trades about -0.06 of its potential returns per unit of risk. The RHI Magnesita NV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,700 in RHI Magnesita NV on September 19, 2024 and sell it today you would earn a total of 100.00 from holding RHI Magnesita NV or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenzing Aktiengesellschaft vs. RHI Magnesita NV
Performance |
| Timeline |
| Lenzing Aktiengesellscha |
| RHI Magnesita NV |
Lenzing Aktiengesellscha and RHI Magnesita Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenzing Aktiengesellscha and RHI Magnesita
The main advantage of trading using opposite Lenzing Aktiengesellscha and RHI Magnesita positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenzing Aktiengesellscha 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.| Lenzing Aktiengesellscha vs. Voestalpine AG | Lenzing Aktiengesellscha vs. Andritz AG | Lenzing Aktiengesellscha vs. Wienerberger AG | Lenzing Aktiengesellscha vs. OMV Aktiengesellschaft |
| 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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