Correlation Between Clariant and Bossard Holding
Can any of the company-specific risk be diversified away by investing in both Clariant and Bossard Holding 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 Clariant and Bossard Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clariant AG and Bossard Holding AG, you can compare the effects of market volatilities on Clariant and Bossard Holding 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 Clariant with a short position of Bossard Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clariant and Bossard Holding.
Diversification Opportunities for Clariant and Bossard Holding
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clariant and Bossard is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Clariant AG and Bossard Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bossard Holding AG and Clariant 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 Clariant AG are associated (or correlated) with Bossard Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bossard Holding AG has no effect on the direction of Clariant i.e., Clariant and Bossard Holding go up and down completely randomly.
Pair Corralation between Clariant and Bossard Holding
Assuming the 90 days trading horizon Clariant is expected to generate 2.5 times less return on investment than Bossard Holding. But when comparing it to its historical volatility, Clariant AG is 1.07 times less risky than Bossard Holding. It trades about 0.1 of its potential returns per unit of risk. Bossard Holding AG is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 19,100 in Bossard Holding AG on October 30, 2024 and sell it today you would earn a total of 1,150 from holding Bossard Holding AG or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clariant AG vs. Bossard Holding AG
Performance |
| Timeline |
| Clariant AG |
| Bossard Holding AG |
Clariant and Bossard Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clariant and Bossard Holding
The main advantage of trading using opposite Clariant and Bossard Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clariant position performs unexpectedly, Bossard Holding 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 Bossard Holding will offset losses from the drop in Bossard Holding's long position.The idea behind Clariant AG and Bossard Holding 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.| Bossard Holding vs. VAT Group AG | Bossard Holding vs. Bucher Industries AG | Bossard Holding vs. EMS CHEMIE HOLDING AG | Bossard Holding vs. Komax Holding AG |
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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