Correlation Between Vienna Insurance and Kapsch Traffic
Can any of the company-specific risk be diversified away by investing in both Vienna Insurance 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 Vienna Insurance and Kapsch Traffic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vienna Insurance Group and Kapsch Traffic, you can compare the effects of market volatilities on Vienna Insurance 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 Vienna Insurance with a short position of Kapsch Traffic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and Kapsch Traffic.
Diversification Opportunities for Vienna Insurance and Kapsch Traffic
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vienna and Kapsch is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and Kapsch Traffic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kapsch Traffic and Vienna Insurance 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 Vienna Insurance Group 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 Vienna Insurance i.e., Vienna Insurance and Kapsch Traffic go up and down completely randomly.
Pair Corralation between Vienna Insurance and Kapsch Traffic
Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 0.67 times more return on investment than Kapsch Traffic. However, Vienna Insurance Group is 1.49 times less risky than Kapsch Traffic. It trades about 0.05 of its potential returns per unit of risk. Kapsch Traffic is currently generating about -0.07 per unit of risk. If you would invest 2,600 in Vienna Insurance Group on August 24, 2024 and sell it today you would earn a total of 290.00 from holding Vienna Insurance Group or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vienna Insurance Group vs. Kapsch Traffic
Performance |
| Timeline |
| Vienna Insurance |
| Kapsch Traffic |
Vienna Insurance and Kapsch Traffic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vienna Insurance and Kapsch Traffic
The main advantage of trading using opposite Vienna Insurance and Kapsch Traffic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vienna Insurance 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.| Vienna Insurance vs. Erste Group Bank | Vienna Insurance vs. UNIQA Insurance Group | Vienna Insurance vs. Raiffeisen Bank International | Vienna Insurance vs. Voestalpine AG |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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