Correlation Between Kapsch Traffic and EVN AG

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

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

Diversification Opportunities for Kapsch Traffic and EVN AG

0.01

Correlation Coefficient

Kapsch Traffic  EVN AG

Significant diversification

The 3 months correlation between Kapsch and EVN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kapsch Traffic and EVN AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVN AG and Kapsch Traffic 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 Kapsch Traffic are associated (or correlated) with EVN AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVN AG has no effect on the direction of Kapsch Traffic i.e., Kapsch Traffic and EVN AG go up and down completely randomly.

Pair Corralation between Kapsch Traffic and EVN AG

Assuming the 90 days trading horizon Kapsch Traffic is expected to generate 1.36 times more return on investment than EVN AG. However, Kapsch Traffic is 1.36 times more volatile than EVN AG. It trades about 0.17 of its potential returns per unit of risk. EVN AG is currently generating about -0.01 per unit of risk. If you would invest  584.00  in Kapsch Traffic on December 28, 2024 and sell it today you would earn a total of  126.00  from holding Kapsch Traffic or generate 21.58% return on investment over 90 days.

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

Kapsch Traffic  vs.  EVN AG

Kapsch Traffic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kapsch Traffic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kapsch Traffic demonstrated solid returns over the last few months and may actually be approaching a breakup point.

EVN AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days EVN AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, EVN AG is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kapsch Traffic and EVN AG

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

The idea behind Kapsch Traffic and EVN 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.

Check out your portfolio center.

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..