Correlation Between AT S and UBM Development

Can any of the company-specific risk be diversified away by investing in both AT S and UBM Development 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 UBM Development 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 UBM Development AG, you can compare the effects of market volatilities on AT S and UBM Development 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 UBM Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of AT S and UBM Development.

Diversification Opportunities for AT S and UBM Development

0.68

Correlation Coefficient

AT S  UBM Development

Poor diversification

The 3 months correlation between ATS and UBM is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AT S Austria and UBM Development AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBM Development 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 UBM Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBM Development AG has no effect on the direction of AT S i.e., AT S and UBM Development go up and down completely randomly.

Pair Corralation between AT S and UBM Development

Assuming the 90 days trading horizon AT S is expected to generate 1.8 times less return on investment than UBM Development. In addition to that, AT S is 1.73 times more volatile than UBM Development AG. It trades about 0.07 of its total potential returns per unit of risk. UBM Development AG is currently generating about 0.23 per unit of volatility. If you would invest  1,610  in UBM Development AG on December 28, 2024 and sell it today you would earn a total of  530.00  from holding UBM Development AG or generate 32.92% return on investment over 90 days.

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

AT S Austria  vs.  UBM Development AG

AT S Austria

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AT S Austria are ranked lower than 5 (%) 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.

UBM Development AG

Risk-Adjusted Performance

Solid

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

Pair Trading with AT S and UBM Development

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

The idea behind AT S Austria and UBM Development 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..