Correlation Between RATH Aktiengesellscha and Voestalpine
Can any of the company-specific risk be diversified away by investing in both RATH Aktiengesellscha and Voestalpine 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 RATH Aktiengesellscha and Voestalpine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RATH Aktiengesellschaft and Voestalpine AG, you can compare the effects of market volatilities on RATH Aktiengesellscha and Voestalpine 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 RATH Aktiengesellscha with a short position of Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of RATH Aktiengesellscha and Voestalpine.
Diversification Opportunities for RATH Aktiengesellscha and Voestalpine
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RATH and Voestalpine is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding RATH Aktiengesellschaft and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG and RATH 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 RATH Aktiengesellschaft are associated (or correlated) with Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG has no effect on the direction of RATH Aktiengesellscha i.e., RATH Aktiengesellscha and Voestalpine go up and down completely randomly.
Pair Corralation between RATH Aktiengesellscha and Voestalpine
Assuming the 90 days trading horizon RATH Aktiengesellschaft is expected to generate 1.14 times more return on investment than Voestalpine. However, RATH Aktiengesellscha is 1.14 times more volatile than Voestalpine AG. It trades about 0.01 of its potential returns per unit of risk. Voestalpine AG is currently generating about -0.03 per unit of risk. If you would invest 2,620 in RATH Aktiengesellschaft on August 30, 2024 and sell it today you would lose (120.00) from holding RATH Aktiengesellschaft or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RATH Aktiengesellschaft vs. Voestalpine AG
Performance |
| Timeline |
| RATH Aktiengesellschaft |
| Voestalpine AG |
RATH Aktiengesellscha and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RATH Aktiengesellscha and Voestalpine
The main advantage of trading using opposite RATH Aktiengesellscha and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RATH Aktiengesellscha position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine's long position.| RATH Aktiengesellscha vs. UNIQA Insurance Group | RATH Aktiengesellscha vs. AMAG Austria Metall | RATH Aktiengesellscha vs. Universal Music Group | RATH Aktiengesellscha vs. Raiffeisen Bank International |
| Voestalpine vs. OMV Aktiengesellschaft | Voestalpine vs. Raiffeisen Bank International | Voestalpine vs. Andritz AG | Voestalpine vs. VERBUND 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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