Correlation Between AMAG Austria and Addiko Bank

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

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

Diversification Opportunities for AMAG Austria and Addiko Bank

-0.05

Correlation Coefficient

AMAG Austria  Addiko Bank

Good diversification

The 3 months correlation between AMAG and Addiko is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AMAG Austria Metall and Addiko Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addiko Bank AG and AMAG Austria 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 AMAG Austria Metall are associated (or correlated) with Addiko Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addiko Bank AG has no effect on the direction of AMAG Austria i.e., AMAG Austria and Addiko Bank go up and down completely randomly.

Pair Corralation between AMAG Austria and Addiko Bank

Assuming the 90 days trading horizon AMAG Austria Metall is expected to under-perform the Addiko Bank. But the stock apears to be less risky and, when comparing its historical volatility, AMAG Austria Metall is 2.01 times less risky than Addiko Bank. The stock trades about -0.02 of its potential returns per unit of risk. The Addiko Bank AG is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,700  in Addiko Bank AG on September 3, 2024 and sell it today you would earn a total of  245.00  from holding Addiko Bank AG or generate 14.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AMAG Austria Metall  vs.  Addiko Bank AG

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

Addiko Bank AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Addiko Bank AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Addiko Bank demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMAG Austria and Addiko Bank

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

The idea behind AMAG Austria Metall and Addiko Bank 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.