Correlation Between Ams AG and Emmi AG
Can any of the company-specific risk be diversified away by investing in both Ams AG and Emmi 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 Ams AG and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ams AG and Emmi AG, you can compare the effects of market volatilities on Ams AG and Emmi 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 Ams AG with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ams AG and Emmi AG.
Diversification Opportunities for Ams AG and Emmi AG
Very poor diversification
The 3 months correlation between Ams and Emmi is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ams AG and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Ams 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 Ams AG are associated (or correlated) with Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of Ams AG i.e., Ams AG and Emmi AG go up and down completely randomly.
Pair Corralation between Ams AG and Emmi AG
Assuming the 90 days trading horizon Ams AG is expected to under-perform the Emmi AG. In addition to that, Ams AG is 4.11 times more volatile than Emmi AG. It trades about -0.08 of its total potential returns per unit of risk. Emmi AG is currently generating about -0.05 per unit of volatility. If you would invest 92,384 in Emmi AG on September 12, 2024 and sell it today you would lose (18,384) from holding Emmi AG or give up 19.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ams AG vs. Emmi AG
Performance |
| Timeline |
| Ams AG |
| Emmi AG |
Ams AG and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ams AG and Emmi AG
The main advantage of trading using opposite Ams AG and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ams AG position performs unexpectedly, Emmi 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 Emmi AG will offset losses from the drop in Emmi AG's long position.| Ams AG vs. Logitech International SA | Ams AG vs. Temenos Group AG | Ams AG vs. Swiss Re AG | Ams AG vs. UBS Group AG |
| Emmi AG vs. Relief Therapeutics Holding | Emmi AG vs. Ams AG | Emmi AG vs. Logitech International SA | Emmi AG vs. SPDR Dow Jones |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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