Correlation Between Kapsch Traffic and Rosenbauer International

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

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

Diversification Opportunities for Kapsch Traffic and Rosenbauer International

0.28

Correlation Coefficient

Kapsch Traffic  Rosenbauer International

Modest diversification

The 3 months correlation between Kapsch and Rosenbauer is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kapsch Traffic and Rosenbauer International AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosenbauer International and Kapsch Traffic 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 Kapsch Traffic are associated (or correlated) with Rosenbauer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosenbauer International has no effect on the direction of Kapsch Traffic i.e., Kapsch Traffic and Rosenbauer International go up and down completely randomly.

Pair Corralation between Kapsch Traffic and Rosenbauer International

Assuming the 90 days trading horizon Kapsch Traffic is expected to under-perform the Rosenbauer International. In addition to that, Kapsch Traffic is 1.36 times more volatile than Rosenbauer International AG. It trades about -0.2 of its total potential returns per unit of risk. Rosenbauer International AG is currently generating about -0.07 per unit of volatility. If you would invest  3,700  in Rosenbauer International AG on September 16, 2024 and sell it today you would lose (250.00) from holding Rosenbauer International AG or give up 6.76% of portfolio value over 90 days.

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

Kapsch Traffic  vs.  Rosenbauer International AG

Kapsch Traffic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kapsch Traffic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Rosenbauer International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rosenbauer International AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Rosenbauer International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kapsch Traffic and Rosenbauer International

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

The idea behind Kapsch Traffic and Rosenbauer International 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.