Correlation Between Vienna Insurance and Lenzing Aktiengesellscha

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

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

Diversification Opportunities for Vienna Insurance and Lenzing Aktiengesellscha

-0.7

Correlation Coefficient

Vienna Insurance  Lenzing Aktiengesellscha

Excellent diversification

The 3 months correlation between Vienna and Lenzing is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and Lenzing Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenzing Aktiengesellscha and Vienna Insurance 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 Vienna Insurance Group are associated (or correlated) with Lenzing Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenzing Aktiengesellscha has no effect on the direction of Vienna Insurance i.e., Vienna Insurance and Lenzing Aktiengesellscha go up and down completely randomly.

Pair Corralation between Vienna Insurance and Lenzing Aktiengesellscha

Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 0.36 times more return on investment than Lenzing Aktiengesellscha. However, Vienna Insurance Group is 2.81 times less risky than Lenzing Aktiengesellscha. It trades about 0.36 of its potential returns per unit of risk. Lenzing Aktiengesellschaft is currently generating about -0.07 per unit of risk. If you would invest  2,920  in Vienna Insurance Group on December 4, 2024 and sell it today you would earn a total of  645.00  from holding Vienna Insurance Group or generate 22.09% return on investment over 90 days.

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

Vienna Insurance Group  vs.  Lenzing Aktiengesellschaft

Vienna Insurance

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Vienna Insurance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lenzing Aktiengesellscha

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lenzing Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic 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 Vienna Insurance and Lenzing Aktiengesellscha

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

The idea behind Vienna Insurance Group and Lenzing Aktiengesellschaft 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.