Correlation Between UBM Development and Wienerberger

Can any of the company-specific risk be diversified away by investing in both UBM Development and Wienerberger 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 Wienerberger 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 Wienerberger AG, you can compare the effects of market volatilities on UBM Development and Wienerberger 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 Wienerberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBM Development and Wienerberger.

Diversification Opportunities for UBM Development and Wienerberger

0.78

Correlation Coefficient

UBM Development  Wienerberger

Poor diversification

The 3 months correlation between UBM and Wienerberger is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding UBM Development AG and Wienerberger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger 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 Wienerberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wienerberger AG has no effect on the direction of UBM Development i.e., UBM Development and Wienerberger go up and down completely randomly.

Pair Corralation between UBM Development and Wienerberger

Assuming the 90 days trading horizon UBM Development AG is expected to under-perform the Wienerberger. But the stock apears to be less risky and, when comparing its historical volatility, UBM Development AG is 1.16 times less risky than Wienerberger. The stock trades about -0.18 of its potential returns per unit of risk. The Wienerberger AG is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,986  in Wienerberger AG on August 30, 2024 and sell it today you would lose (310.00) from holding Wienerberger AG or give up 10.38% of portfolio value over 90 days.

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

UBM Development AG  vs.  Wienerberger AG

UBM Development AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBM Development AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Wienerberger AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with UBM Development and Wienerberger

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

The idea behind UBM Development AG and Wienerberger 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.