Correlation Between S IMMO and Voestalpine

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

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

Diversification Opportunities for S IMMO and Voestalpine

-0.04

Correlation Coefficient

S IMMO  Voestalpine

Good diversification

The 3 months correlation between SPI and Voestalpine is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding S IMMO AG and Voestalpine AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG and S IMMO 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 S IMMO AG are associated (or correlated) with Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG has no effect on the direction of S IMMO i.e., S IMMO and Voestalpine go up and down completely randomly.

Pair Corralation between S IMMO and Voestalpine

Assuming the 90 days trading horizon S IMMO AG is expected to generate 0.28 times more return on investment than Voestalpine. However, S IMMO AG is 3.51 times less risky than Voestalpine. It trades about -0.01 of its potential returns per unit of risk. Voestalpine AG is currently generating about -0.09 per unit of risk. If you would invest  2,230  in S IMMO AG on September 5, 2024 and sell it today you would lose (10.00) from holding S IMMO AG or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

S IMMO AG  vs.  Voestalpine AG

S IMMO AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Voestalpine AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voestalpine AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental 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 S IMMO and Voestalpine

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

The idea behind S IMMO AG and Voestalpine 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.