Correlation Between Wiener Privatbank and Kapsch Traffic

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

By analyzing existing cross correlation between Wiener Privatbank SE and Kapsch Traffic, you can compare the effects of market volatilities on Wiener Privatbank and Kapsch Traffic 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 Wiener Privatbank with a short position of Kapsch Traffic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wiener Privatbank and Kapsch Traffic.

Diversification Opportunities for Wiener Privatbank and Kapsch Traffic

0.5

Correlation Coefficient

Wiener Privatbank  Kapsch Traffic

Very weak diversification

The 3 months correlation between Wiener and Kapsch is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Wiener Privatbank SE and Kapsch Traffic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kapsch Traffic and Wiener Privatbank 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 Wiener Privatbank SE are associated (or correlated) with Kapsch Traffic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kapsch Traffic has no effect on the direction of Wiener Privatbank i.e., Wiener Privatbank and Kapsch Traffic go up and down completely randomly.

Pair Corralation between Wiener Privatbank and Kapsch Traffic

Assuming the 90 days trading horizon Wiener Privatbank is expected to generate 1.15 times less return on investment than Kapsch Traffic. In addition to that, Wiener Privatbank is 1.03 times more volatile than Kapsch Traffic. It trades about 0.14 of its total potential returns per unit of risk. Kapsch Traffic is currently generating about 0.17 per unit of volatility. If you would invest  584.00  in Kapsch Traffic on December 30, 2024 and sell it today you would earn a total of  126.00  from holding Kapsch Traffic or generate 21.58% return on investment over 90 days.

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

Wiener Privatbank SE  vs.  Kapsch Traffic

Wiener Privatbank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wiener Privatbank SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Wiener Privatbank demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kapsch Traffic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kapsch Traffic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kapsch Traffic demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wiener Privatbank and Kapsch Traffic

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

The idea behind Wiener Privatbank SE and Kapsch Traffic 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.