Correlation Between Tatry Mountain and Vienna Insurance

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

By analyzing existing cross correlation between Tatry Mountain Resorts and Vienna Insurance Group, you can compare the effects of market volatilities on Tatry Mountain and Vienna Insurance 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 Tatry Mountain with a short position of Vienna Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tatry Mountain and Vienna Insurance.

Diversification Opportunities for Tatry Mountain and Vienna Insurance

0.48

Correlation Coefficient

Tatry Mountain  Vienna Insurance

Very weak diversification

The 3 months correlation between Tatry and Vienna is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tatry Mountain Resorts and Vienna Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vienna Insurance and Tatry Mountain 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 Tatry Mountain Resorts are associated (or correlated) with Vienna Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vienna Insurance has no effect on the direction of Tatry Mountain i.e., Tatry Mountain and Vienna Insurance go up and down completely randomly.

Pair Corralation between Tatry Mountain and Vienna Insurance

Assuming the 90 days trading horizon Tatry Mountain is expected to generate 10.56 times less return on investment than Vienna Insurance. In addition to that, Tatry Mountain is 1.81 times more volatile than Vienna Insurance Group. It trades about 0.0 of its total potential returns per unit of risk. Vienna Insurance Group is currently generating about 0.07 per unit of volatility. If you would invest  54,683  in Vienna Insurance Group on September 26, 2024 and sell it today you would earn a total of  21,317  from holding Vienna Insurance Group or generate 38.98% return on investment over 90 days.

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

Tatry Mountain Resorts  vs.  Vienna Insurance Group

Tatry Mountain Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tatry Mountain Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tatry Mountain is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Vienna Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vienna Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Vienna Insurance is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tatry Mountain and Vienna Insurance

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

The idea behind Tatry Mountain Resorts and Vienna Insurance Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.