Correlation Between Emmi AG and Belimo Holding
Can any of the company-specific risk be diversified away by investing in both Emmi AG and Belimo 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 Emmi AG and Belimo Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emmi AG and Belimo Holding, you can compare the effects of market volatilities on Emmi AG and Belimo 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 Emmi AG with a short position of Belimo Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emmi AG and Belimo Holding.
Diversification Opportunities for Emmi AG and Belimo Holding
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Emmi and Belimo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Belimo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belimo Holding and Emmi 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 Emmi AG are associated (or correlated) with Belimo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belimo Holding has no effect on the direction of Emmi AG i.e., Emmi AG and Belimo Holding go up and down completely randomly.
Pair Corralation between Emmi AG and Belimo Holding
Assuming the 90 days trading horizon Emmi AG is expected to generate 69.6 times less return on investment than Belimo Holding. But when comparing it to its historical volatility, Emmi AG is 1.57 times less risky than Belimo Holding. It trades about 0.0 of its potential returns per unit of risk. Belimo Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 45,034 in Belimo Holding on September 3, 2024 and sell it today you would earn a total of 13,916 from holding Belimo Holding or generate 30.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emmi AG vs. Belimo Holding
Performance |
| Timeline |
| Emmi AG |
| Belimo Holding |
Emmi AG and Belimo Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emmi AG and Belimo Holding
The main advantage of trading using opposite Emmi AG and Belimo Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emmi AG position performs unexpectedly, Belimo 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 Belimo Holding will offset losses from the drop in Belimo Holding's long position.| Emmi AG vs. Bucher Industries AG | Emmi AG vs. EMS CHEMIE HOLDING AG | Emmi AG vs. Barry Callebaut AG | Emmi AG vs. Geberit AG |
| Belimo Holding vs. EMS CHEMIE HOLDING AG | Belimo Holding vs. Geberit AG | Belimo Holding vs. VAT Group AG | Belimo Holding vs. Interroll 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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