Correlation Between Oberbank and Addiko Bank

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

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

Diversification Opportunities for Oberbank and Addiko Bank

0.01

Correlation Coefficient

Oberbank  Addiko Bank

Significant diversification

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

Pair Corralation between Oberbank and Addiko Bank

Assuming the 90 days trading horizon Oberbank AG is expected to generate 0.03 times more return on investment than Addiko Bank. However, Oberbank AG is 32.85 times less risky than Addiko Bank. It trades about 0.18 of its potential returns per unit of risk. Addiko Bank AG is currently generating about -0.01 per unit of risk. If you would invest  6,980  in Oberbank AG on December 30, 2024 and sell it today you would earn a total of  40.00  from holding Oberbank AG or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Oberbank AG  vs.  Addiko Bank AG

Oberbank AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oberbank AG are ranked lower than 14 (%) 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.

Addiko Bank AG

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Oberbank and Addiko Bank

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

The idea behind Oberbank AG and Addiko Bank 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 Stocks Directory module to find actively traded stocks across global markets.