Correlation Between RATH Aktiengesellscha and Addiko Bank

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

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

Diversification Opportunities for RATH Aktiengesellscha and Addiko Bank

-0.73

Correlation Coefficient

RATH Aktiengesellscha  Addiko Bank

Pay attention - limited upside

The 3 months correlation between RATH and Addiko is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding RATH Aktiengesellschaft 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 RATH 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 RATH Aktiengesellschaft 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 RATH Aktiengesellscha i.e., RATH Aktiengesellscha and Addiko Bank go up and down completely randomly.

Pair Corralation between RATH Aktiengesellscha and Addiko Bank

Assuming the 90 days trading horizon RATH Aktiengesellschaft is expected to under-perform the Addiko Bank. But the stock apears to be less risky and, when comparing its historical volatility, RATH Aktiengesellschaft is 3.83 times less risky than Addiko Bank. The stock trades about -0.13 of its potential returns per unit of risk. The Addiko Bank AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,710  in Addiko Bank AG on September 2, 2024 and sell it today you would earn a total of  240.00  from holding Addiko Bank AG or generate 14.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

RATH Aktiengesellschaft  vs.  Addiko Bank AG

RATH Aktiengesellschaft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RATH Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, RATH Aktiengesellscha 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

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Addiko Bank AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Addiko Bank demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RATH Aktiengesellscha and Addiko Bank

The main advantage of trading using opposite RATH Aktiengesellscha and Addiko Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RATH Aktiengesellscha 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 RATH Aktiengesellschaft 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.