Correlation Between Addiko Bank and Raiffeisen Bank

Can any of the company-specific risk be diversified away by investing in both Addiko Bank and Raiffeisen Bank 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 Addiko Bank and Raiffeisen Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Addiko Bank AG and Raiffeisen Bank International, you can compare the effects of market volatilities on Addiko Bank and Raiffeisen Bank 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 Addiko Bank with a short position of Raiffeisen Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addiko Bank and Raiffeisen Bank.

Diversification Opportunities for Addiko Bank and Raiffeisen Bank

-0.73

Correlation Coefficient

Addiko Bank  Raiffeisen Bank

Pay attention - limited upside

The 3 months correlation between Addiko and Raiffeisen is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Addiko Bank AG and Raiffeisen Bank International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raiffeisen Bank Inte and Addiko Bank 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 Addiko Bank AG are associated (or correlated) with Raiffeisen Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raiffeisen Bank Inte has no effect on the direction of Addiko Bank i.e., Addiko Bank and Raiffeisen Bank go up and down completely randomly.

Pair Corralation between Addiko Bank and Raiffeisen Bank

Assuming the 90 days trading horizon Addiko Bank AG is expected to generate 1.2 times more return on investment than Raiffeisen Bank. However, Addiko Bank is 1.2 times more volatile than Raiffeisen Bank International. It trades about 0.23 of its potential returns per unit of risk. Raiffeisen Bank International is currently generating about -0.12 per unit of risk. If you would invest  1,375  in Addiko Bank AG on March 5, 2024 and sell it today you would earn a total of  595.00  from holding Addiko Bank AG or generate 43.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Addiko Bank AG  vs.  Raiffeisen Bank International

Addiko Bank AG

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Addiko Bank AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Addiko Bank demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Raiffeisen Bank Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raiffeisen Bank International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Addiko Bank and Raiffeisen Bank

The main advantage of trading using opposite Addiko Bank and Raiffeisen Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addiko Bank position performs unexpectedly, Raiffeisen Bank 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 Raiffeisen Bank will offset losses from the drop in Raiffeisen Bank's long position.

The idea behind Addiko Bank AG and Raiffeisen Bank International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.