Correlation Between Lenzing Aktiengesellscha and Linz Textil

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

By analyzing existing cross correlation between Lenzing Aktiengesellschaft and Linz Textil Holding, you can compare the effects of market volatilities on Lenzing Aktiengesellscha and Linz Textil 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 Lenzing Aktiengesellscha with a short position of Linz Textil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenzing Aktiengesellscha and Linz Textil.

Diversification Opportunities for Lenzing Aktiengesellscha and Linz Textil

-0.43

Correlation Coefficient

Lenzing Aktiengesellscha  Linz Textil

Very good diversification

The 3 months correlation between Lenzing and Linz is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lenzing Aktiengesellschaft and Linz Textil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linz Textil Holding and Lenzing Aktiengesellscha 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 Lenzing Aktiengesellschaft are associated (or correlated) with Linz Textil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linz Textil Holding has no effect on the direction of Lenzing Aktiengesellscha i.e., Lenzing Aktiengesellscha and Linz Textil go up and down completely randomly.

Pair Corralation between Lenzing Aktiengesellscha and Linz Textil

Assuming the 90 days trading horizon Lenzing Aktiengesellschaft is expected to under-perform the Linz Textil. But the stock apears to be less risky and, when comparing its historical volatility, Lenzing Aktiengesellschaft is 1.56 times less risky than Linz Textil. The stock trades about -0.16 of its potential returns per unit of risk. The Linz Textil Holding is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  16,000  in Linz Textil Holding on August 31, 2024 and sell it today you would earn a total of  4,800  from holding Linz Textil Holding or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Lenzing Aktiengesellschaft  vs.  Linz Textil Holding

Lenzing Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

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

Linz Textil Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Linz Textil Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Linz Textil demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lenzing Aktiengesellscha and Linz Textil

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

The idea behind Lenzing Aktiengesellschaft and Linz Textil Holding 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.