Correlation Between Voestalpine and S IMMO

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

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

Diversification Opportunities for Voestalpine and S IMMO

0.01

Correlation Coefficient

Voestalpine  S IMMO

Significant diversification

The 3 months correlation between Voestalpine and SPI is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Voestalpine AG and S IMMO AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S IMMO 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 S IMMO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S IMMO AG has no effect on the direction of Voestalpine i.e., Voestalpine and S IMMO go up and down completely randomly.

Pair Corralation between Voestalpine and S IMMO

Assuming the 90 days trading horizon Voestalpine AG is expected to under-perform the S IMMO. In addition to that, Voestalpine is 1.11 times more volatile than S IMMO AG. It trades about -0.01 of its total potential returns per unit of risk. S IMMO AG is currently generating about 0.09 per unit of volatility. If you would invest  1,200  in S IMMO AG on September 14, 2024 and sell it today you would earn a total of  1,020  from holding S IMMO AG or generate 85.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

Voestalpine AG  vs.  S IMMO AG

Voestalpine AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voestalpine AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Voestalpine is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

S IMMO AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days S IMMO AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, S IMMO is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Voestalpine and S IMMO

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

The idea behind Voestalpine AG and S IMMO 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.