Correlation Between AGRANA Beteiligungs and Kapsch Traffic

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

By analyzing existing cross correlation between AGRANA Beteiligungs Aktiengesellschaft and Kapsch Traffic, you can compare the effects of market volatilities on AGRANA Beteiligungs and Kapsch Traffic 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 AGRANA Beteiligungs with a short position of Kapsch Traffic. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRANA Beteiligungs and Kapsch Traffic.

Diversification Opportunities for AGRANA Beteiligungs and Kapsch Traffic

0.23

Correlation Coefficient

AGRANA Beteiligungs  Kapsch Traffic

Modest diversification

The 3 months correlation between AGRANA and Kapsch is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AGRANA Beteiligungs Aktiengese and Kapsch Traffic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kapsch Traffic and AGRANA Beteiligungs 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 AGRANA Beteiligungs Aktiengesellschaft are associated (or correlated) with Kapsch Traffic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kapsch Traffic has no effect on the direction of AGRANA Beteiligungs i.e., AGRANA Beteiligungs and Kapsch Traffic go up and down completely randomly.

Pair Corralation between AGRANA Beteiligungs and Kapsch Traffic

Assuming the 90 days trading horizon AGRANA Beteiligungs Aktiengesellschaft is expected to generate 0.78 times more return on investment than Kapsch Traffic. However, AGRANA Beteiligungs Aktiengesellschaft is 1.28 times less risky than Kapsch Traffic. It trades about -0.07 of its potential returns per unit of risk. Kapsch Traffic is currently generating about -0.2 per unit of risk. If you would invest  1,160  in AGRANA Beteiligungs Aktiengesellschaft on September 14, 2024 and sell it today you would lose (85.00) from holding AGRANA Beteiligungs Aktiengesellschaft or give up 7.33% of portfolio value over 90 days.

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

AGRANA Beteiligungs Aktiengese  vs.  Kapsch Traffic

AGRANA Beteiligungs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGRANA Beteiligungs Aktiengesellschaft 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.

Kapsch Traffic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kapsch Traffic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with AGRANA Beteiligungs and Kapsch Traffic

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

The idea behind AGRANA Beteiligungs Aktiengesellschaft and Kapsch Traffic 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.