Correlation Between Voestalpine and Oesterr Post

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

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

Diversification Opportunities for Voestalpine and Oesterr Post

0.81

Correlation Coefficient

Voestalpine  Oesterr Post

Very poor diversification

The 3 months correlation between Voestalpine and Oesterr is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Voestalpine AG and Oesterr Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oesterr Post AG and Voestalpine 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 Voestalpine AG are associated (or correlated) with Oesterr Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oesterr Post AG has no effect on the direction of Voestalpine i.e., Voestalpine and Oesterr Post go up and down completely randomly.

Pair Corralation between Voestalpine and Oesterr Post

Assuming the 90 days trading horizon Voestalpine AG is expected to generate 2.85 times more return on investment than Oesterr Post. However, Voestalpine is 2.85 times more volatile than Oesterr Post AG. It trades about 0.16 of its potential returns per unit of risk. Oesterr Post AG is currently generating about 0.23 per unit of risk. If you would invest  1,818  in Voestalpine AG on December 1, 2024 and sell it today you would earn a total of  394.00  from holding Voestalpine AG or generate 21.67% return on investment over 90 days.

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

Voestalpine AG  vs.  Oesterr Post AG

Voestalpine AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Voestalpine AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Voestalpine demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Oesterr Post AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oesterr Post AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Oesterr Post may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Voestalpine and Oesterr Post

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

The idea behind Voestalpine AG and Oesterr Post 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.