Correlation Between Associated British and Emmi AG
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Emmi AG, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Emmi AG.
Diversification Opportunities for Associated British and Emmi AG
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and Emmi is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Emmi AG go up and down completely randomly.
Pair Corralation between Associated British and Emmi AG
Assuming the 90 days horizon Associated British Foods is expected to under-perform the Emmi AG. In addition to that, Associated British is 2.41 times more volatile than Emmi AG. It trades about -0.06 of its total potential returns per unit of risk. Emmi AG is currently generating about -0.04 per unit of volatility. If you would invest 103,100 in Emmi AG on September 3, 2024 and sell it today you would lose (4,100) from holding Emmi AG or give up 3.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Emmi AG
Performance |
| Timeline |
| Associated British Foods |
| Emmi AG |
Associated British and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Emmi AG
The main advantage of trading using opposite Associated British and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Kellanova | Associated British vs. Lancaster Colony | Associated British vs. The A2 Milk | Associated British vs. Altavoz Entertainment |
| Emmi AG vs. Kikkoman Corp ADR | Emmi AG vs. Kerry Group PLC | Emmi AG vs. Associated British Foods | Emmi AG vs. Nestle SA ADR |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |