Correlation Between AT S and Polytec Holding

Can any of the company-specific risk be diversified away by investing in both AT S and Polytec Holding 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 AT S and Polytec Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for AT S and Polytec Holding

0.4

Correlation Coefficient

AT S  Polytec Holding

Very weak diversification

The 3 months correlation between ATS and Polytec is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding AT S Austria and Polytec Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polytec Holding AG and AT S 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 AT S Austria are associated (or correlated) with Polytec Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polytec Holding AG has no effect on the direction of AT S i.e., AT S and Polytec Holding go up and down completely randomly.

Pair Corralation between AT S and Polytec Holding

Assuming the 90 days trading horizon AT S is expected to generate 1.32 times less return on investment than Polytec Holding. In addition to that, AT S is 1.43 times more volatile than Polytec Holding AG. It trades about 0.12 of its total potential returns per unit of risk. Polytec Holding AG is currently generating about 0.23 per unit of volatility. If you would invest  209.00  in Polytec Holding AG on December 21, 2024 and sell it today you would earn a total of  85.00  from holding Polytec Holding AG or generate 40.67% return on investment over 90 days.

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

AT S Austria  vs.  Polytec Holding AG

AT S Austria

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AT S Austria are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, AT S demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Polytec Holding AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Polytec Holding AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Polytec Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AT S and Polytec Holding

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

The idea behind AT S Austria and Polytec Holding 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..