Correlation Between EVN AG and Kapsch Traffic

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

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

Diversification Opportunities for EVN AG and Kapsch Traffic

0.79

Correlation Coefficient

EVN AG  Kapsch Traffic

Poor diversification

The 3 months correlation between EVN and Kapsch is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding EVN AG and Kapsch Traffic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kapsch Traffic and EVN 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 EVN AG are associated (or correlated) with Kapsch Traffic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kapsch Traffic has no effect on the direction of EVN AG i.e., EVN AG and Kapsch Traffic go up and down completely randomly.

Pair Corralation between EVN AG and Kapsch Traffic

Assuming the 90 days trading horizon EVN AG is expected to under-perform the Kapsch Traffic. But the stock apears to be less risky and, when comparing its historical volatility, EVN AG is 1.36 times less risky than Kapsch Traffic. The stock trades about -0.29 of its potential returns per unit of risk. The Kapsch Traffic is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  804.00  in Kapsch Traffic on September 13, 2024 and sell it today you would lose (192.00) from holding Kapsch Traffic or give up 23.88% of portfolio value over 90 days.

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

EVN AG  vs.  Kapsch Traffic

EVN AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVN AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Kapsch Traffic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kapsch Traffic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with EVN AG and Kapsch Traffic

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

The idea behind EVN AG and Kapsch Traffic 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..