Correlation Between OMV Aktiengesellscha and VERBUND AG

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

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

Diversification Opportunities for OMV Aktiengesellscha and VERBUND AG

-0.68

Correlation Coefficient

OMV Aktiengesellscha  VERBUND AG

Excellent diversification

The 3 months correlation between OMV and VERBUND is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding OMV Aktiengesellschaft and VERBUND AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND AG and OMV Aktiengesellscha 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 OMV Aktiengesellschaft are associated (or correlated) with VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG has no effect on the direction of OMV Aktiengesellscha i.e., OMV Aktiengesellscha and VERBUND AG go up and down completely randomly.

Pair Corralation between OMV Aktiengesellscha and VERBUND AG

Assuming the 90 days trading horizon OMV Aktiengesellschaft is expected to generate 0.78 times more return on investment than VERBUND AG. However, OMV Aktiengesellschaft is 1.29 times less risky than VERBUND AG. It trades about 0.33 of its potential returns per unit of risk. VERBUND AG is currently generating about -0.04 per unit of risk. If you would invest  3,734  in OMV Aktiengesellschaft on December 29, 2024 and sell it today you would earn a total of  1,028  from holding OMV Aktiengesellschaft or generate 27.53% return on investment over 90 days.

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

OMV Aktiengesellschaft  vs.  VERBUND AG

OMV Aktiengesellschaft

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in OMV Aktiengesellschaft are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, OMV Aktiengesellscha demonstrated solid returns over the last few months and may actually be approaching a breakup point.

VERBUND AG

Risk-Adjusted Performance

Very Weak

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

Pair Trading with OMV Aktiengesellscha and VERBUND AG

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

The idea behind OMV Aktiengesellschaft and VERBUND 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.