Correlation Between Vienna Insurance and CHINA STATE

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

Diversification Opportunities for Vienna Insurance and CHINA STATE

0.35

Correlation Coefficient

Vienna Insurance  CHINA STATE

Weak diversification

The 3 months correlation between Vienna and CHINA is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and CHINA STATE STRU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA STATE STRU 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 CHINA STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA STATE STRU has no effect on the direction of Vienna Insurance i.e., Vienna Insurance and CHINA STATE go up and down completely randomly.

Pair Corralation between Vienna Insurance and CHINA STATE

Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 1.16 times more return on investment than CHINA STATE. However, Vienna Insurance is 1.16 times more volatile than CHINA STATE STRU. It trades about 0.11 of its potential returns per unit of risk. CHINA STATE STRU is currently generating about -0.1 per unit of risk. If you would invest  2,830  in Vienna Insurance Group on October 8, 2024 and sell it today you would earn a total of  190.00  from holding Vienna Insurance Group or generate 6.71% return on investment over 90 days.

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

Vienna Insurance Group  vs.  CHINA STATE STRU

Vienna Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vienna Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CHINA STATE STRU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA STATE STRU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CHINA STATE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vienna Insurance and CHINA STATE

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

The idea behind Vienna Insurance Group and CHINA STATE STRU 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.