Correlation Between SW Umwelttechnik and AMAG Austria

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

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

Diversification Opportunities for SW Umwelttechnik and AMAG Austria

-0.76

Correlation Coefficient

SW Umwelttechnik  AMAG Austria

Pay attention - limited upside

The 3 months correlation between SWUT and AMAG is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SW Umwelttechnik Stoiser and AMAG Austria Metall in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG Austria Metall and SW Umwelttechnik 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 SW Umwelttechnik Stoiser are associated (or correlated) with AMAG Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG Austria Metall has no effect on the direction of SW Umwelttechnik i.e., SW Umwelttechnik and AMAG Austria go up and down completely randomly.

Pair Corralation between SW Umwelttechnik and AMAG Austria

Assuming the 90 days trading horizon SW Umwelttechnik Stoiser is expected to generate 1.67 times more return on investment than AMAG Austria. However, SW Umwelttechnik is 1.67 times more volatile than AMAG Austria Metall. It trades about 0.04 of its potential returns per unit of risk. AMAG Austria Metall is currently generating about -0.04 per unit of risk. If you would invest  4,200  in SW Umwelttechnik Stoiser on March 7, 2024 and sell it today you would earn a total of  620.00  from holding SW Umwelttechnik Stoiser or generate 14.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	41.43%
Values	Daily Returns

SW Umwelttechnik Stoiser  vs.  AMAG Austria Metall

SW Umwelttechnik Stoiser

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days SW Umwelttechnik Stoiser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly inconsistent basic indicators, SW Umwelttechnik demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 fairly strong basic indicators, AMAG Austria is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SW Umwelttechnik and AMAG Austria

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

The idea behind SW Umwelttechnik Stoiser and AMAG Austria Metall 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.