Correlation Between BAWAG Group and Addiko Bank

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

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

Diversification Opportunities for BAWAG Group and Addiko Bank

0.19

Correlation Coefficient

BAWAG Group  Addiko Bank

Average diversification

The 3 months correlation between BAWAG and Addiko is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BAWAG Group AG and Addiko Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addiko Bank AG and BAWAG 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 BAWAG Group AG are associated (or correlated) with Addiko Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addiko Bank AG has no effect on the direction of BAWAG Group i.e., BAWAG Group and Addiko Bank go up and down completely randomly.

Pair Corralation between BAWAG Group and Addiko Bank

Assuming the 90 days horizon BAWAG Group is expected to generate 1.4 times less return on investment than Addiko Bank. But when comparing it to its historical volatility, BAWAG Group AG is 1.53 times less risky than Addiko Bank. It trades about 0.15 of its potential returns per unit of risk. Addiko Bank AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,590  in Addiko Bank AG on September 14, 2024 and sell it today you would earn a total of  280.00  from holding Addiko Bank AG or generate 17.61% return on investment over 90 days.

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

BAWAG Group AG  vs.  Addiko Bank AG

BAWAG Group AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BAWAG Group AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BAWAG Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Addiko Bank AG

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Addiko Bank AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Addiko Bank demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BAWAG Group and Addiko Bank

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

The idea behind BAWAG Group AG and Addiko Bank 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.