Correlation Between AMAG Austria and Raiffeisen Bank

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

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

Diversification Opportunities for AMAG Austria and Raiffeisen Bank

0.74

Correlation Coefficient

AMAG Austria  Raiffeisen Bank

Poor diversification

The 3 months correlation between AMAG and Raiffeisen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AMAG Austria Metall 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 AMAG 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 AMAG Austria Metall 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 AMAG Austria i.e., AMAG Austria and Raiffeisen Bank go up and down completely randomly.

Pair Corralation between AMAG Austria and Raiffeisen Bank

Assuming the 90 days trading horizon AMAG Austria Metall is expected to generate 0.54 times more return on investment than Raiffeisen Bank. However, AMAG Austria Metall is 1.86 times less risky than Raiffeisen Bank. It trades about -0.1 of its potential returns per unit of risk. Raiffeisen Bank International is currently generating about -0.07 per unit of risk. If you would invest  2,860  in AMAG Austria Metall on February 11, 2024 and sell it today you would lose (240.00) from holding AMAG Austria Metall or give up 8.39% of portfolio value over 90 days.

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

AMAG Austria Metall  vs.  Raiffeisen Bank International

AMAG Austria Metall

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMAG Austria Metall has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with AMAG Austria and Raiffeisen Bank

The main advantage of trading using opposite AMAG Austria and Raiffeisen Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMAG Austria 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 AMAG Austria Metall 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.