Correlation Between SW Umwelttechnik and Oberbank

Can any of the company-specific risk be diversified away by investing in both SW Umwelttechnik and Oberbank 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 Oberbank 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 Oberbank AG, you can compare the effects of market volatilities on SW Umwelttechnik and Oberbank 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 Oberbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SW Umwelttechnik and Oberbank.

Diversification Opportunities for SW Umwelttechnik and Oberbank

-0.04

Correlation Coefficient

SW Umwelttechnik  Oberbank

Good diversification

The 3 months correlation between SWUT and Oberbank is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SW Umwelttechnik Stoiser and Oberbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberbank AG 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 Oberbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberbank AG has no effect on the direction of SW Umwelttechnik i.e., SW Umwelttechnik and Oberbank go up and down completely randomly.

Pair Corralation between SW Umwelttechnik and Oberbank

Assuming the 90 days trading horizon SW Umwelttechnik Stoiser is expected to generate 1.83 times more return on investment than Oberbank. However, SW Umwelttechnik is 1.83 times more volatile than Oberbank AG. It trades about 0.16 of its potential returns per unit of risk. Oberbank AG is currently generating about 0.0 per unit of risk. If you would invest  4,620  in SW Umwelttechnik Stoiser on March 7, 2024 and sell it today you would earn a total of  200.00  from holding SW Umwelttechnik Stoiser or generate 4.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.07%
Values	Daily Returns

SW Umwelttechnik Stoiser  vs.  Oberbank AG

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.

Oberbank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oberbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Oberbank 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 Oberbank

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

The idea behind SW Umwelttechnik Stoiser and Oberbank 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.