Correlation Between Palfinger and Andritz AG

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

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

Diversification Opportunities for Palfinger and Andritz AG

0.59

Correlation Coefficient

Palfinger  Andritz AG

Very weak diversification

The 3 months correlation between Palfinger and Andritz is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Palfinger AG and Andritz AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andritz AG and Palfinger 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 Palfinger AG are associated (or correlated) with Andritz AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andritz AG has no effect on the direction of Palfinger i.e., Palfinger and Andritz AG go up and down completely randomly.

Pair Corralation between Palfinger and Andritz AG

Assuming the 90 days trading horizon Palfinger is expected to generate 4.39 times less return on investment than Andritz AG. In addition to that, Palfinger is 1.11 times more volatile than Andritz AG. It trades about 0.01 of its total potential returns per unit of risk. Andritz AG is currently generating about 0.06 per unit of volatility. If you would invest  3,992  in Andritz AG on March 20, 2024 and sell it today you would earn a total of  1,918  from holding Andritz AG or generate 48.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.78%
Values	Daily Returns

Palfinger AG  vs.  Andritz AG

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.

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.

Pair Trading with Palfinger and Andritz AG

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

The idea behind Palfinger AG and Andritz 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 Anywhere module to track or share privately all of your investments from the convenience of any device.