Correlation Between Palfinger and Rosenbauer International

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

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

Diversification Opportunities for Palfinger and Rosenbauer International

0.41

Correlation Coefficient

Palfinger  Rosenbauer International

Very weak diversification

The 3 months correlation between Palfinger and Rosenbauer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Palfinger AG and Rosenbauer International AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosenbauer International and Palfinger 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 Palfinger AG are associated (or correlated) with Rosenbauer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosenbauer International has no effect on the direction of Palfinger i.e., Palfinger and Rosenbauer International go up and down completely randomly.

Pair Corralation between Palfinger and Rosenbauer International

Assuming the 90 days trading horizon Palfinger AG is expected to under-perform the Rosenbauer International. But the stock apears to be less risky and, when comparing its historical volatility, Palfinger AG is 1.16 times less risky than Rosenbauer International. The stock trades about -0.11 of its potential returns per unit of risk. The Rosenbauer International AG is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,700  in Rosenbauer International AG on September 14, 2024 and sell it today you would lose (170.00) from holding Rosenbauer International AG or give up 4.59% of portfolio value over 90 days.

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

Palfinger AG  vs.  Rosenbauer International AG

Palfinger AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Palfinger AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Rosenbauer International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Palfinger and Rosenbauer International

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

The idea behind Palfinger AG and Rosenbauer International 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 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..