Correlation Between RATH Aktiengesellscha and Lenzing Aktiengesellscha

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

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

Diversification Opportunities for RATH Aktiengesellscha and Lenzing Aktiengesellscha

0.61

Correlation Coefficient

RATH Aktiengesellscha  Lenzing Aktiengesellscha

Poor diversification

The 3 months correlation between RATH and Lenzing is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding RATH Aktiengesellschaft and Lenzing Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenzing Aktiengesellscha and RATH 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 RATH Aktiengesellschaft are associated (or correlated) with Lenzing Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenzing Aktiengesellscha has no effect on the direction of RATH Aktiengesellscha i.e., RATH Aktiengesellscha and Lenzing Aktiengesellscha go up and down completely randomly.

Pair Corralation between RATH Aktiengesellscha and Lenzing Aktiengesellscha

Assuming the 90 days trading horizon RATH Aktiengesellschaft is expected to under-perform the Lenzing Aktiengesellscha. But the stock apears to be less risky and, when comparing its historical volatility, RATH Aktiengesellschaft is 3.49 times less risky than Lenzing Aktiengesellscha. The stock trades about -0.13 of its potential returns per unit of risk. The Lenzing Aktiengesellschaft is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,055  in Lenzing Aktiengesellschaft on September 14, 2024 and sell it today you would earn a total of  5.00  from holding Lenzing Aktiengesellschaft or generate 0.16% return on investment over 90 days.

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

RATH Aktiengesellschaft  vs.  Lenzing Aktiengesellschaft

RATH Aktiengesellschaft

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with RATH Aktiengesellscha and Lenzing Aktiengesellscha

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

The idea behind RATH Aktiengesellschaft and Lenzing 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.