Correlation Between Wiener Privatbank and Voestalpine

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

Diversification Opportunities for Wiener Privatbank and Voestalpine

0.23

Correlation Coefficient

Wiener Privatbank  Voestalpine

Modest diversification

The 3 months correlation between Wiener and Voestalpine is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wiener Privatbank SE and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG has no effect on the direction of Wiener Privatbank i.e., Wiener Privatbank and Voestalpine go up and down completely randomly.

Pair Corralation between Wiener Privatbank and Voestalpine

Assuming the 90 days trading horizon Wiener Privatbank is expected to generate 4.32 times less return on investment than Voestalpine. But when comparing it to its historical volatility, Wiener Privatbank SE is 1.02 times less risky than Voestalpine. It trades about 0.03 of its potential returns per unit of risk. Voestalpine AG is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,821  in Voestalpine AG on November 28, 2024 and sell it today you would earn a total of  277.00  from holding Voestalpine AG or generate 15.21% return on investment over 90 days.

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

Wiener Privatbank SE  vs.  Voestalpine AG

Wiener Privatbank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wiener Privatbank SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Wiener Privatbank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Voestalpine AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voestalpine AG are ranked lower than 10 (%) 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.

Pair Trading with Wiener Privatbank and Voestalpine

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

The idea behind Wiener Privatbank SE and Voestalpine 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.