Correlation Between Telekom Austria and Palfinger
Can any of the company-specific risk be diversified away by investing in both Telekom Austria and Palfinger 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 Telekom Austria and Palfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telekom Austria AG and Palfinger AG, you can compare the effects of market volatilities on Telekom Austria and Palfinger 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 Telekom Austria with a short position of Palfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telekom Austria and Palfinger.
Diversification Opportunities for Telekom Austria and Palfinger
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telekom and Palfinger is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Telekom Austria AG and Palfinger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palfinger AG and Telekom Austria 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 Telekom Austria AG are associated (or correlated) with Palfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palfinger AG has no effect on the direction of Telekom Austria i.e., Telekom Austria and Palfinger go up and down completely randomly.
Pair Corralation between Telekom Austria and Palfinger
Assuming the 90 days trading horizon Telekom Austria AG is expected to generate 0.86 times more return on investment than Palfinger. However, Telekom Austria AG is 1.16 times less risky than Palfinger. It trades about 0.03 of its potential returns per unit of risk. Palfinger AG is currently generating about -0.07 per unit of risk. If you would invest 734.00 in Telekom Austria AG on August 27, 2024 and sell it today you would earn a total of 43.00 from holding Telekom Austria AG or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telekom Austria AG vs. Palfinger AG
Performance |
| Timeline |
| Telekom Austria AG |
| Palfinger AG |
Telekom Austria and Palfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telekom Austria and Palfinger
The main advantage of trading using opposite Telekom Austria and Palfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telekom Austria position performs unexpectedly, Palfinger 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 Palfinger will offset losses from the drop in Palfinger's long position.| Telekom Austria vs. Voestalpine AG | Telekom Austria vs. Oesterr Post AG | Telekom Austria vs. Wienerberger AG | Telekom Austria vs. VERBUND AG |
| Palfinger vs. RATH Aktiengesellschaft | Palfinger vs. Semperit Aktiengesellschaft Holding | Palfinger vs. Oesterr Post AG | Palfinger vs. Anheuser Busch InBev SANV |
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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