Correlation Between Emmi AG and EMS CHEMIE
Can any of the company-specific risk be diversified away by investing in both Emmi AG and EMS CHEMIE 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 EMS CHEMIE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emmi AG and EMS CHEMIE HOLDING AG, you can compare the effects of market volatilities on Emmi AG and EMS CHEMIE 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 EMS CHEMIE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emmi AG and EMS CHEMIE.
Diversification Opportunities for Emmi AG and EMS CHEMIE
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Emmi and EMS is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and EMS CHEMIE HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMS CHEMIE 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 EMS CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMS CHEMIE HOLDING has no effect on the direction of Emmi AG i.e., Emmi AG and EMS CHEMIE go up and down completely randomly.
Pair Corralation between Emmi AG and EMS CHEMIE
Assuming the 90 days trading horizon Emmi AG is expected to generate 0.79 times more return on investment than EMS CHEMIE. However, Emmi AG is 1.27 times less risky than EMS CHEMIE. It trades about -0.11 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about -0.1 per unit of risk. If you would invest 90,000 in Emmi AG on August 29, 2024 and sell it today you would lose (11,800) from holding Emmi AG or give up 13.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emmi AG vs. EMS CHEMIE HOLDING AG
Performance |
| Timeline |
| Emmi AG |
| EMS CHEMIE HOLDING |
Emmi AG and EMS CHEMIE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emmi AG and EMS CHEMIE
The main advantage of trading using opposite Emmi AG and EMS CHEMIE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emmi AG position performs unexpectedly, EMS CHEMIE 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 EMS CHEMIE will offset losses from the drop in EMS CHEMIE's long position.| Emmi AG vs. Santhera Pharmaceuticals Holding | Emmi AG vs. Newron Pharmaceuticals SpA | Emmi AG vs. Basilea Pharmaceutica AG | Emmi AG vs. Evolva Holding SA |
| EMS CHEMIE vs. Geberit AG | EMS CHEMIE vs. Lonza Group AG | EMS CHEMIE vs. SGS SA | EMS CHEMIE 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |