Correlation Between UBM Development and Telekom Austria

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

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

Diversification Opportunities for UBM Development and Telekom Austria

0.82

Correlation Coefficient

UBM Development  Telekom Austria

Very poor diversification

The 3 months correlation between UBM and Telekom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding UBM Development AG and Telekom Austria AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telekom Austria AG and UBM Development 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 UBM Development AG are associated (or correlated) with Telekom Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telekom Austria AG has no effect on the direction of UBM Development i.e., UBM Development and Telekom Austria go up and down completely randomly.

Pair Corralation between UBM Development and Telekom Austria

Assuming the 90 days trading horizon UBM Development AG is expected to generate 1.41 times more return on investment than Telekom Austria. However, UBM Development is 1.41 times more volatile than Telekom Austria AG. It trades about 0.22 of its potential returns per unit of risk. Telekom Austria AG is currently generating about 0.14 per unit of risk. If you would invest  1,710  in UBM Development AG on December 2, 2024 and sell it today you would earn a total of  260.00  from holding UBM Development AG or generate 15.2% return on investment over 90 days.

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

UBM Development AG  vs.  Telekom Austria AG

UBM Development AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBM Development AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, UBM Development demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Telekom Austria AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telekom Austria AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Telekom Austria may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UBM Development and Telekom Austria

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

The idea behind UBM Development AG and Telekom Austria 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.