Correlation Between Zumtobel Group and Voestalpine

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

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

Diversification Opportunities for Zumtobel Group and Voestalpine

-0.68

Correlation Coefficient

Zumtobel Group  Voestalpine

Excellent diversification

The 3 months correlation between Zumtobel and Voestalpine is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Zumtobel Group AG and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG and Zumtobel Group 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 Zumtobel Group AG 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 Zumtobel Group i.e., Zumtobel Group and Voestalpine go up and down completely randomly.

Pair Corralation between Zumtobel Group and Voestalpine

Assuming the 90 days trading horizon Zumtobel Group AG is expected to under-perform the Voestalpine. But the stock apears to be less risky and, when comparing its historical volatility, Zumtobel Group AG is 1.85 times less risky than Voestalpine. The stock trades about -0.06 of its potential returns per unit of risk. The Voestalpine AG is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,833  in Voestalpine AG on December 30, 2024 and sell it today you would earn a total of  499.00  from holding Voestalpine AG or generate 27.22% return on investment over 90 days.

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

Zumtobel Group AG  vs.  Voestalpine AG

Zumtobel Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zumtobel Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Zumtobel Group 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

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.

Pair Trading with Zumtobel Group and Voestalpine

The main advantage of trading using opposite Zumtobel Group and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zumtobel Group 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 Zumtobel Group AG 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.