Correlation Between Zumtobel Group and IMMOFINANZ

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

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

Diversification Opportunities for Zumtobel Group and IMMOFINANZ

0.63

Correlation Coefficient

Zumtobel Group  IMMOFINANZ

Poor diversification

The 3 months correlation between Zumtobel and IMMOFINANZ is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Zumtobel Group AG and IMMOFINANZ AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMMOFINANZ AG and Zumtobel Group 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 Zumtobel Group AG are associated (or correlated) with IMMOFINANZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMMOFINANZ AG has no effect on the direction of Zumtobel Group i.e., Zumtobel Group and IMMOFINANZ go up and down completely randomly.

Pair Corralation between Zumtobel Group and IMMOFINANZ

Assuming the 90 days trading horizon Zumtobel Group AG is expected to generate 0.64 times more return on investment than IMMOFINANZ. However, Zumtobel Group AG is 1.57 times less risky than IMMOFINANZ. It trades about -0.07 of its potential returns per unit of risk. IMMOFINANZ AG is currently generating about -0.1 per unit of risk. If you would invest  604.00  in Zumtobel Group AG on September 13, 2024 and sell it today you would lose (108.00) from holding Zumtobel Group AG or give up 17.88% of portfolio value over 90 days.

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

Zumtobel Group AG  vs.  IMMOFINANZ AG

Zumtobel Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zumtobel Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

IMMOFINANZ AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IMMOFINANZ AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Zumtobel Group and IMMOFINANZ

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

The idea behind Zumtobel Group AG and IMMOFINANZ 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.