Correlation Between Autoneum Holding and Rieter Holding

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

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

Diversification Opportunities for Autoneum Holding and Rieter Holding

0.83

Correlation Coefficient

Autoneum Holding  Rieter Holding

Very poor diversification

The 3 months correlation between Autoneum and Rieter is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Autoneum Holding AG and Rieter Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rieter Holding AG and Autoneum Holding 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 Autoneum Holding AG are associated (or correlated) with Rieter Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rieter Holding AG has no effect on the direction of Autoneum Holding i.e., Autoneum Holding and Rieter Holding go up and down completely randomly.

Pair Corralation between Autoneum Holding and Rieter Holding

Assuming the 90 days trading horizon Autoneum Holding AG is expected to generate 1.04 times more return on investment than Rieter Holding. However, Autoneum Holding is 1.04 times more volatile than Rieter Holding AG. It trades about 0.0 of its potential returns per unit of risk. Rieter Holding AG is currently generating about -0.12 per unit of risk. If you would invest  11,520  in Autoneum Holding AG on September 17, 2024 and sell it today you would lose (140.00) from holding Autoneum Holding AG or give up 1.22% of portfolio value over 90 days.

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

Autoneum Holding AG  vs.  Rieter Holding AG

Autoneum Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autoneum Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Autoneum Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Rieter Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rieter Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Autoneum Holding and Rieter Holding

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

The idea behind Autoneum Holding AG and Rieter 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.