Correlation Between Lenzing Aktiengesellscha and Wolford Aktiengesellscha

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

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

Diversification Opportunities for Lenzing Aktiengesellscha and Wolford Aktiengesellscha

0.06

Correlation Coefficient

Lenzing Aktiengesellscha  Wolford Aktiengesellscha

Significant diversification

The 3 months correlation between Lenzing and Wolford is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lenzing Aktiengesellschaft and Wolford Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolford Aktiengesellscha and Lenzing Aktiengesellscha 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 Lenzing Aktiengesellschaft are associated (or correlated) with Wolford Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolford Aktiengesellscha has no effect on the direction of Lenzing Aktiengesellscha i.e., Lenzing Aktiengesellscha and Wolford Aktiengesellscha go up and down completely randomly.

Pair Corralation between Lenzing Aktiengesellscha and Wolford Aktiengesellscha

Assuming the 90 days trading horizon Lenzing Aktiengesellschaft is expected to under-perform the Wolford Aktiengesellscha. But the stock apears to be less risky and, when comparing its historical volatility, Lenzing Aktiengesellschaft is 3.06 times less risky than Wolford Aktiengesellscha. The stock trades about -0.01 of its potential returns per unit of risk. The Wolford Aktiengesellschaft is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  312.00  in Wolford Aktiengesellschaft on September 15, 2024 and sell it today you would earn a total of  136.00  from holding Wolford Aktiengesellschaft or generate 43.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Lenzing Aktiengesellschaft  vs.  Wolford Aktiengesellschaft

Lenzing Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wolford Aktiengesellscha

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wolford Aktiengesellschaft are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Wolford Aktiengesellscha demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lenzing Aktiengesellscha and Wolford Aktiengesellscha

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

The idea behind Lenzing Aktiengesellschaft and Wolford Aktiengesellschaft 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.