Correlation Between Raiffeisen Bank and Palfinger

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

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

Diversification Opportunities for Raiffeisen Bank and Palfinger

0.91

Correlation Coefficient

Raiffeisen Bank  Palfinger

Almost no diversification

The 3 months correlation between Raiffeisen and Palfinger is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Raiffeisen Bank International and Palfinger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palfinger AG and Raiffeisen Bank 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 Raiffeisen Bank International are associated (or correlated) with Palfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palfinger AG has no effect on the direction of Raiffeisen Bank i.e., Raiffeisen Bank and Palfinger go up and down completely randomly.

Pair Corralation between Raiffeisen Bank and Palfinger

Assuming the 90 days trading horizon Raiffeisen Bank International is expected to generate 1.78 times more return on investment than Palfinger. However, Raiffeisen Bank is 1.78 times more volatile than Palfinger AG. It trades about 0.2 of its potential returns per unit of risk. Palfinger AG is currently generating about 0.2 per unit of risk. If you would invest  1,891  in Raiffeisen Bank International on December 4, 2024 and sell it today you would earn a total of  639.00  from holding Raiffeisen Bank International or generate 33.79% return on investment over 90 days.

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

Raiffeisen Bank International  vs.  Palfinger AG

Raiffeisen Bank Inte

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Raiffeisen Bank International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Raiffeisen Bank demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Palfinger AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palfinger AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Palfinger demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raiffeisen Bank and Palfinger

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

The idea behind Raiffeisen Bank International and Palfinger 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..