Correlation Between AT S and Voestalpine

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

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

Diversification Opportunities for AT S and Voestalpine

0.14

Correlation Coefficient

AT S  Voestalpine

Average diversification

The 3 months correlation between ATS and Voestalpine is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding AT S Austria and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG and AT S 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 AT S Austria are associated (or correlated) with Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG has no effect on the direction of AT S i.e., AT S and Voestalpine go up and down completely randomly.

Pair Corralation between AT S and Voestalpine

Assuming the 90 days trading horizon AT S Austria is expected to generate 1.8 times more return on investment than Voestalpine. However, AT S is 1.8 times more volatile than Voestalpine AG. It trades about 0.07 of its potential returns per unit of risk. Voestalpine AG is currently generating about -0.13 per unit of risk. If you would invest  1,870  in AT S Austria on February 12, 2024 and sell it today you would earn a total of  70.00  from holding AT S Austria or generate 3.74% return on investment over 90 days.

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

AT S Austria  vs.  Voestalpine AG

AT S Austria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AT S Austria 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.

Voestalpine AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voestalpine AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Voestalpine is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AT S and Voestalpine

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

The idea behind AT S Austria and Voestalpine AG 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.