Correlation Between RATH Aktiengesellscha and Palfinger

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

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

Diversification Opportunities for RATH Aktiengesellscha and Palfinger

0.87

Correlation Coefficient

RATH Aktiengesellscha  Palfinger

Very poor diversification

The 3 months correlation between RATH and Palfinger is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding RATH Aktiengesellschaft and Palfinger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palfinger AG 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 Palfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palfinger AG has no effect on the direction of RATH Aktiengesellscha i.e., RATH Aktiengesellscha and Palfinger go up and down completely randomly.

Pair Corralation between RATH Aktiengesellscha and Palfinger

Assuming the 90 days trading horizon RATH Aktiengesellschaft is expected to generate 1.2 times more return on investment than Palfinger. However, RATH Aktiengesellscha is 1.2 times more volatile than Palfinger AG. It trades about 0.01 of its potential returns per unit of risk. Palfinger AG is currently generating about -0.02 per unit of risk. If you would invest  2,620  in RATH Aktiengesellschaft on September 14, 2024 and sell it today you would lose (120.00) from holding RATH Aktiengesellschaft or give up 4.58% of portfolio value over 90 days.

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

RATH Aktiengesellschaft  vs.  Palfinger AG

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.

Palfinger AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Palfinger AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with RATH Aktiengesellscha and Palfinger

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

The idea behind RATH Aktiengesellschaft and Palfinger 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.