Correlation Between Andritz AG and Lenzing Aktiengesellscha

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

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

Diversification Opportunities for Andritz AG and Lenzing Aktiengesellscha

0.76

Correlation Coefficient

Andritz AG  Lenzing Aktiengesellscha

Poor diversification

The 3 months correlation between Andritz and Lenzing is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Andritz AG and Lenzing Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenzing Aktiengesellscha and Andritz AG 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 Andritz AG are associated (or correlated) with Lenzing Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenzing Aktiengesellscha has no effect on the direction of Andritz AG i.e., Andritz AG and Lenzing Aktiengesellscha go up and down completely randomly.

Pair Corralation between Andritz AG and Lenzing Aktiengesellscha

Assuming the 90 days trading horizon Andritz AG is expected to under-perform the Lenzing Aktiengesellscha. But the stock apears to be less risky and, when comparing its historical volatility, Andritz AG is 1.16 times less risky than Lenzing Aktiengesellscha. The stock trades about -0.1 of its potential returns per unit of risk. The Lenzing Aktiengesellschaft is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,085  in Lenzing Aktiengesellschaft on August 30, 2024 and sell it today you would lose (125.00) from holding Lenzing Aktiengesellschaft or give up 4.05% of portfolio value over 90 days.

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

Andritz AG  vs.  Lenzing Aktiengesellschaft

Andritz AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andritz AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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.

Pair Trading with Andritz AG and Lenzing Aktiengesellscha

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

The idea behind Andritz AG and Lenzing Aktiengesellschaft 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.