Correlation Between Voestalpine and RHI Magnesita
Can any of the company-specific risk be diversified away by investing in both Voestalpine 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 Voestalpine and RHI Magnesita into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voestalpine AG and RHI Magnesita NV, you can compare the effects of market volatilities on Voestalpine 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 Voestalpine with a short position of RHI Magnesita. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voestalpine and RHI Magnesita.
Diversification Opportunities for Voestalpine and RHI Magnesita
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Voestalpine and RHI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Voestalpine AG 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 Voestalpine 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 Voestalpine AG 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 Voestalpine i.e., Voestalpine and RHI Magnesita go up and down completely randomly.
Pair Corralation between Voestalpine and RHI Magnesita
Assuming the 90 days trading horizon Voestalpine AG is expected to under-perform the RHI Magnesita. In addition to that, Voestalpine is 1.03 times more volatile than RHI Magnesita NV. It trades about -0.03 of its total potential returns per unit of risk. RHI Magnesita NV is currently generating about 0.08 per unit of volatility. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voestalpine AG vs. RHI Magnesita NV
Performance |
| Timeline |
| Voestalpine AG |
| RHI Magnesita NV |
Voestalpine and RHI Magnesita Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voestalpine and RHI Magnesita
The main advantage of trading using opposite Voestalpine and RHI Magnesita positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voestalpine 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.| Voestalpine vs. OMV Aktiengesellschaft | Voestalpine vs. Raiffeisen Bank International | Voestalpine vs. Andritz AG | Voestalpine vs. VERBUND AG |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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