Correlation Between Andritz AG and Palfinger

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

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

Diversification Opportunities for Andritz AG and Palfinger

0.59

Correlation Coefficient

Andritz AG  Palfinger

Very weak diversification

The 3 months correlation between Andritz and Palfinger is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Andritz AG and Palfinger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palfinger AG and Andritz AG 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 Andritz AG 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 Andritz AG i.e., Andritz AG and Palfinger go up and down completely randomly.

Pair Corralation between Andritz AG and Palfinger

Assuming the 90 days trading horizon Andritz AG is expected to generate 1.42 times more return on investment than Palfinger. However, Andritz AG is 1.42 times more volatile than Palfinger AG. It trades about 0.25 of its potential returns per unit of risk. Palfinger AG is currently generating about -0.11 per unit of risk. If you would invest  5,500  in Andritz AG on March 20, 2024 and sell it today you would earn a total of  410.00  from holding Andritz AG or generate 7.45% return on investment over 90 days.

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

Andritz AG  vs.  Palfinger AG

Andritz AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Andritz AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Andritz AG 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

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Palfinger AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Palfinger is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Andritz AG and Palfinger

The main advantage of trading using opposite Andritz AG and Palfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andritz AG 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 Andritz AG 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.