Can any of the company-specific risk be diversified away by investing in both Vienna Insurance and BKS 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 Vienna Insurance and BKS Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vienna Insurance Group and BKS Bank AG, you can compare the effects of market volatilities on Vienna Insurance and BKS 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 Vienna Insurance with a short position of BKS Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and BKS Bank.
Diversification Opportunities for Vienna Insurance and BKS Bank
The 3 months correlation between Vienna and BKS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and BKS Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKS Bank AG and Vienna Insurance 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 Vienna Insurance Group are associated (or correlated) with BKS Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKS Bank AG has no effect on the direction of Vienna Insurance i.e., Vienna Insurance and BKS Bank go up and down completely randomly.
Pair Corralation between Vienna Insurance and BKS Bank
Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 1.79 times more return on investment than BKS Bank. However, Vienna Insurance is 1.79 times more volatile than BKS Bank AG. It trades about 0.01 of its potential returns per unit of risk. BKS Bank AG is currently generating about -0.04 per unit of risk. If you would invest 2,950 in Vienna Insurance Group on March 6, 2024 and sell it today you would earn a total of 0.00 from holding Vienna Insurance Group or generate 0.0% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Vienna Insurance may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Compared to the overall equity markets, risk-adjusted returns on investments in BKS Bank AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BKS Bank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.