Correlation Between Elma Electronic and Logitech International
Can any of the company-specific risk be diversified away by investing in both Elma Electronic and Logitech International 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 Elma Electronic and Logitech International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elma Electronic AG and Logitech International SA, you can compare the effects of market volatilities on Elma Electronic and Logitech International 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 Elma Electronic with a short position of Logitech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elma Electronic and Logitech International.
Diversification Opportunities for Elma Electronic and Logitech International
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elma and Logitech is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Elma Electronic AG and Logitech International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logitech International and Elma Electronic 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 Elma Electronic AG are associated (or correlated) with Logitech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logitech International has no effect on the direction of Elma Electronic i.e., Elma Electronic and Logitech International go up and down completely randomly.
Pair Corralation between Elma Electronic and Logitech International
Assuming the 90 days trading horizon Elma Electronic is expected to generate 1.73 times less return on investment than Logitech International. But when comparing it to its historical volatility, Elma Electronic AG is 3.44 times less risky than Logitech International. It trades about 0.16 of its potential returns per unit of risk. Logitech International SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,828 in Logitech International SA on December 11, 2024 and sell it today you would earn a total of 486.00 from holding Logitech International SA or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 47.62% |
| Values | Daily Returns |
Elma Electronic AG vs. Logitech International SA
Performance |
| Timeline |
| Elma Electronic AG |
| Logitech International |
Elma Electronic and Logitech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elma Electronic and Logitech International
The main advantage of trading using opposite Elma Electronic and Logitech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elma Electronic position performs unexpectedly, Logitech International 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 Logitech International will offset losses from the drop in Logitech International's long position.| Elma Electronic vs. Carlo Gavazzi Holding | Elma Electronic vs. Feintool International Holding | Elma Electronic vs. Graubuendner Kantonalbank | Elma Electronic vs. Also Holding AG |
| Logitech International vs. Geberit AG | Logitech International vs. Sika AG | Logitech International vs. Lonza Group AG | Logitech International vs. Swiss Life Holding |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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