Correlation Between BAWAG Group and Oberbank

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

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

Diversification Opportunities for BAWAG Group and Oberbank

0.63

Correlation Coefficient

BAWAG Group  Oberbank

Poor diversification

The 3 months correlation between BAWAG and Oberbank is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BAWAG Group AG and Oberbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberbank AG and BAWAG Group 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 BAWAG Group AG are associated (or correlated) with Oberbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberbank AG has no effect on the direction of BAWAG Group i.e., BAWAG Group and Oberbank go up and down completely randomly.

Pair Corralation between BAWAG Group and Oberbank

Assuming the 90 days horizon BAWAG Group AG is expected to generate 15.07 times more return on investment than Oberbank. However, BAWAG Group is 15.07 times more volatile than Oberbank AG. It trades about 0.12 of its potential returns per unit of risk. Oberbank AG is currently generating about 0.14 per unit of risk. If you would invest  6,760  in BAWAG Group AG on September 3, 2024 and sell it today you would earn a total of  740.00  from holding BAWAG Group AG or generate 10.95% return on investment over 90 days.

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

BAWAG Group AG  vs.  Oberbank AG

BAWAG Group AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BAWAG Group AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BAWAG Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oberbank AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oberbank AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Oberbank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BAWAG Group and Oberbank

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

The idea behind BAWAG Group AG and Oberbank 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.